Windows 1.0 was the first ever commercial release of Microsoft Windows, an operating system that would eventually dominate the PC world for more than a decade.
The first development on Windows began in September of 1981. They were still calling it Interface Manager back then, and it bore little resemblance to today's Windows (or even to the finished Windows 1.0. The initial prototypes featured menus at the bottom of the screen, but eventually they changed the interface to closer resemble the Xerox Star. By 1983 they had changed the name to Windows (the name was coined by Rowland Hanson, who was Microsoft's marketing guru at the time). They made the initial product announcement at the Plaza Hotel in New York, and claimed this new system would provide a GUI and multitasking abilities for the IBM PC, and would be available by April of 1984. But this announcement came only after VisiCorp (the makers of VisiCalc, which was a killer app for its time), released VisiOn, which was another operating environment designed to run on top of DOS. Not to mention the fact that the groundbreaking Apple Lisa was already on the market.
Bill Gates showed a beta version to IBM late in 1983 (hoping to gain their support), but they pretended to be unimpressed due to the concurrent development of their own Top View software (which beat Windows to market, but only lasted a few years, and never did have a real GUI).
Windows version 1.0 finally shipped on November 20, 1985. It did not exactly take the computing world by storm, as it faced heavy competition in the form of TopView, VisiOn, GEM, and DESQview (all of which beat Windows to market). The situation was not helped when Apple threatened Microsoft with a lawsuit over infringements on Apple's copyrights. Microsoft and Apple finally came to a licensing agreement that they were both happy with (Microsoft ended up getting the better deal because the contract allowed for the use Apple's features in all future Microsoft products). The operating system itself was considered to be a crude hack, and bug ridden, but it was the start of something big for Microsoft.
The initial Windows release (version 1.01), required MS-DOS 2.0, 256K of RAM, 2 double-sided disk drives or a hard drive, and a Graphics-adapter card. Later versions increased the memory requirement to 320K, but the other system requirements remained unchanged. Windows shipped with a small selection of native applications, many of which still exist today in one format or another. This package consisted of MS-DOS Executive (the file manager), Calendar, Cardfile, Notepad, Terminal, Calculator, Clock, Reversi, Control Panel, PIF Editor, Print Spooler, Clipboard, RAMDrive, Windows Write, and Windows Paint. This was about all prospective Windows users had to work with, since third party Windows software was almost non-existent for the first few years. These Windows 1.0 applications will not run on later versions of Windows (not even on Windows 2.0, I have tried). If Microsoft had kept up that trend of ditching backwards compatibility, then Windows would probably be a much better operating system today (although it would probably have a smaller market share).
The interface itself was somewhat similar to that of the Macintosh (or of modern day Windows). It included pull down menus, and allowed more than one application to run by placing them in separate windows. But the "windows" could not overlap each other. They had to be "tiled" on the screen, which made them of limited use on the low-resolution displays of the mid 1980s. The color schemes left something to be desired (on systems that could support color), and overall the system was not nearly as polished in its appearance as the competing Macintosh was.
The system itself gained very little market share until Aldus PageMaker shipped in January of 1987 with a Windows executable. This was the first WYSIWYG desktop publishing program available on the PC platform, and finally gave people a reason to buy Windows. Later Windows compatible products included Excel and Corel Draw. But the system as a whole still needed work, and development on Windows 2.0 had already begun.
Today you will almost never encounter a Windows 1.0 installation out in the real world. It never had much of a market share to begin with, and never ran the kind of mission critical applications that keep some machines in service for 20 years or more. However, it has become a valuable collectors item, and a genuine set of Windows 1.0 install disks (preferably with documentation), will sell for several hundred dollars on eBay.