The initial design goals for Windows 95 were to create a more user-friendly OS that supported 32-bit software, was easier to install, and was more stable. Originally, Microsoft planned to make the OS easier to use by simplifying the way software and networks were configured by end users.
The user interface was supposed to remain unchanged from Windows 3.1, as Microsoft was already developing a new UI for Cairo. Ultimately, though, Microsoft ported the new UI to the Windows 95 project. As a result, Windows 95 became the first version of Windows to feature the Start bar, and it also was the first to use Windows Explorer.
Windows 95 was technically still DOS-based like Windows 3.1, but it also had an unprecedented degree of independence from DOS in terms of its architecture and internal operation. System stability was significantly increased by running multiple virtual machines under the OS. This reduced the impact of a single piece of software crashing. It also placed a layer of software between programs and the hardware, which made it less likely a software crash would cause the entire OS to fail.
Performance was drastically improved in Windows 95, because the OS supported execution of preemptively multitasked 32-bit applications in protected mode. The OS was also able to use faster processors, and it had practical memory support for up to 512MB of RAM. The minimum requirements called for just a 32-bit processor, 4MB of RAM, and 50MB of hard drive space. This meant the OS could be run on a wide number of computers that didn't meet the requirements of Windows NT.
As For Cairo, it was ultimately scrapped, but parts of its code were re-used in future OSes.
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