In October 1994 IBM released OS/2 Warp, the most popular version of OS/2. Its underpinnings weren't all that different from OS/2 version 2.11 but it was considered a leap forward in terms of usability. OS/2 Warp was IBM's best attempt at gaining dominance on the desktop, or at least significant marketshare. The attempt for grabbing greater marketshare was moderately successful.
Similarly to OS/2 2.1, there were two versions of OS/2 Warp available: basic Warp without Win-OS/2 called Red Spine. This version was prevalent because most people already owned Windows 3.1. The other version was Warp with Win-OS/2 called Blue Spine. In mid-1995, two additional versions of Warp were made available with the introduction of Warp Connect (again in Red and Blue Spine versions).
OS/2 Warp had several things going for it:
It was a reliable, efficient 32-bit OS. It offered excellent compatibility with DOS and Windows 3.1 applications. It's capable of running communication packages in the background, without interruption of OS/2 programs in the foreground. It was reasonably easy to use, with the included Workplace Shell.
But naturally OS/2 Warp had weaknesses as well:
Application vendors argued that by developing a DOS or Windows app, they would reach the OS/2 market in addition to DOS/Windows markets, thus many native OS/2 applications were not developed. Tough competition from Microsoft, such as locking OEMs into Windows preload agreements and preventing ISVs from developing OS/2 applications. Lack of commitment from IBM, for example not preloading OS/2 on some IBM hardware. Poor marketing. IBM traditionally were very good at targeting corporate customers but had little experience at mass marketing.
There was a number of technical differences: OS/2 Warp supported an improved executable format offering much better compression. Unfortunately few developers used it. Improved display and printer driver model made it easier for developers to write drivers for these devices. Even so, writing a display driver was a huge job. Improved multimedia, adding support for TV cards, video capture boards and the like. Much larger selection of available drivers.
There was a number of usability enhancements as well: Ability to alter the boot process with Alt-F1. Improved desktop layout, new icons, more attractive color scheme. Greatly improved and much better looking tutorials.
The Big Thing The biggest new thing in OS/2 Warp was of course the Internet. OS/2 suported the Internet before Microsoft. Next to FaxWorks, VideoIn or IBM Works there was IBM Internet Connection for OS/2. It was aimed purely at dial-up users and contained an IBM dialer plus "Dial Other Internet Providers" (DOIP) dialer, at that time only supporting SLIP and not the newer and later prevalent PPP.
Basic Internet client software was also supplied - FTP, Telnet, e-mail, news, and WWW. Plus support for some protocols that are now no longer supported, such as Gopher.
Warp Connect In 1995 IBM introduced OS/2 Warp Connect. This was basically a bundle of several existing IBM products. In addition to the base system and BonusPak, Warp Connect included IBM's LAN client (optionally with peer functionality), Novell NetWare requester, TCP/IP support and LAN Distance (remote LAN access). Thus Warp Connect was indeed very well connected. For basic networking support there was MPTS (Multi-Protocol Transport Services) which was required by all the other products. IBM Peer was a very scaled down version of the LAN Server without most administration tools. Perhaps the most interesting of the pack was the TCP/IP support. Again it was a somewhat scaled-down version of IBM's TCP/IP kit without NFS support, X server and similar relatively esoteric software. What it did include however was full support for TCP/IP transport protocols and a number of client applications: FTP, Telnet, Gopher, e-mail, news (NNTP) and WWW - much like the IBM Internet Connection in OS/2 Warp.
OS/2 in the Marketplace OS/2 Warp was not in an ideal position. Microsoft was putting serious pressure on IBM with the release of Windows 95, refusing to sign the Windows 95 license until the last moment and requesting much higher payments from IBM than from other OEMs. There was one other internal project that had bearing on the future of OS/2: OS/2 for PowerPC. It was a somewhat nebulous project which kept changing directions during its lifetime. It is hard to tell what was at the beginning of this project, if there indeed was any clearly definable beginning at all. At some point in early 1990's IBM decided that it would be a good idea. It was to be a microkernel-based, object oriented OS running on a RISC platform. It was to be able to run several operating systems at the same time. Nobody can agree anymore on which OSes exactly those were but it is certain that they included OS/2, Windows NT, MacOS and Solaris. IBM never adequately explained the need to run multiple OSes.
IBM kept changing the project, which was now officially called OS/2 Warp Connect, PowerPC Edition. IBM was hyping this product quite heavily between 1993 and 1995. IBM used a cross compiler from MetaWare to build programs on Intel OS/2 and then transfer them to PowerPC machines. There were porting workshops going on and companies like Stardock or Sundial Systems ported their products to OS/2 for PowerPC, which supposedly wasn't even very hard.
As the release date for OS/2 Warp Connect, PowerPC Edition neared, the hype subsided. When OS/2 for PowerPC was supposed to be released, IBM fell silent. The product was released, but was not easily available.
There are multiple reasons for the failure of the OS/2 for PowerPC project. Some were external to IBM, others were purely internal:
There was no market demand. Many stories about serious mismanagement surfaced. The project hinged on the success of the PowerPC architecture, which failed on the market.
On the whole, OS/2 for PowerPC was a failure. The PSP division (Personal Systems Products) was seriously weakened and didn't survive for long. A lot of money was effectively wasted for the most part, even though several technologies developed for OS/2 for PowerPC later resurfaced in OS/2 Warp 4. 
|OS/2 Warp 4.0 Branch|
IBM OS/2 2.x
|IBM OS/2 Warp 3.0|| Followed by|
IBM OS/2 Warp 4.0