Microsoft has developed operating systems since the 80s, starting with DOS, Disk Operating System. Every two or three years they make modifications to the OS. Sometimes the changes they make are tweaks, minor improvements that make working with it easier. Other times the improvements are major, like when they went from the DOS world to the Windows world with Windows 2.0. It's been a Windows world ever since.
The biggest reason that Microsoft makes changes and upgrades the OS is to keep up with hardware demands. In 1975, the Intel Chip, the 8088 was a single 8 bit processor. Today the processor chip comes in many forms, with a quad-4 chip set and 64 bits. That is a lot of processing power.
Windows 7 comes from a long line of workstation operating systems. Windows for Workgroups (1992), Windows 95 (1995), Windows 98 (1998), Windows Millennium (1999), Windows 2000 Professional (2000), Windows XP (2003), and Vista (2006).
Besides hardware changes, Microsoft has been keen to make the user interface, the desktop, more user friendly. This happens as a result of requests from users, and as a reaction to Apple. User input has made a big impact on Microsoft. Changes in icons, the use of the windows explorer, and search operations were big. Perhaps the biggest change was the introduction of the Wizard.
While it is taken for granted now, the introduction of the Wizard as a consistent installation interface allowed new users to work effortlessly with their computer. The Wizard is a series of screens that allow a user to install programs easily and quickly. If you don't know how to install a program, just accept the defaults and it will do it for you. This was a big advance in making computer applications user friendly. Another Wizard that was important was a printers Wizard. This Wizard allowed users to easily install a printer, both local or network.
Apple also had a large impact on Windows development. The first Window like interface came on the MacIntosh in the early 1980s. Microsoft soon had its own Windows applications, but it didn't make the move to an operating system independent of DOS until 1995. Apple was always one or two steps ahead of Windows type development compared to Microsoft. When Windows XP came out, however, it was heralded as a success; it was what an OS should be. It was stable and fast. But still the GUI was not up to Mac standards. For a large segment of users, the GUI was a nice flash, but they were interested in stability and speed. Windows XP had those two features.
Vista was the next OS to be release by Microsoft around 2006. It took many features from Apple. The user interface was snazzy and fun. It had a new kernel, the same one that Server 2008 had, so it could work with any of the new processors. It was scalable up to 256 processors.
But Vista was slow; it took a long time for it to boot up and begin to function. It had to many user blocks. It assumed that all users were first time computer users and needed guidance. It was hard for administrators to manage. Programs that were in the start menu in XP were now missing. Drivers for printers, audio and video cards were not available; there was a lack of backward compatibility. Because of these problems Vista was seen as a commercial failure. While updates followed, and fixed a number of problems, it was not enough; a large segment of the PC user community remained loyal to Windows XP, especially in the business world.