In the late 1970s and early 1980s, a small company nestled along the shore of California's Monterey Bay had a healthy share of the market for personal computer operating systems. The company was Digital Research Inc. and its operating system, CP/M, was the most popular such software on a wide variety of small business personal computers.

That was before International Business Machines Corp. introduced the PC, and before a new operating system called DOS was introduced by Microsoft Corp.

These days, Microsoft is the top personal computer software publisher in the world and Digital Research remains a small company still making operating system software.

In 1981, the then-unknown Microsoft had in DOS a new operating system that was a lot like CP/M, only better. Today it is Digital Research with a new operating system that is a lot like DOS, only better. It is called DR DOS, version 5.0, and is priced at $199.

The new DR DOS has all the features of regular DOS version 3.31, plus many enhancements that help you better manage your computer's memory, use large-size hard disks, control the cursor blink, keep track of your files and do simple text editing.

There are different operating systems for different designs of computers. Apple Computer's Macintosh, for instance, has its own Apple-designed operating system. Amiga and Atari computers each come with their own proprietary operating systems.

But in the IBM-compatible world where so many manufacturers build similar machinery, you have a choice of what operating system to run. You can, for instance, run IBM DOS on non-IBM-built computers with little problem. Or you can run Microsoft DOS or DOS licensed from Microsoft by another manufacturer, such as Compaq, on an IBM machine.

You can also buy DR DOS from Digital Research, (800) 443-4200. It is compatible with both Microsoft and IBM versions of DOS and offers a lot of additional features.

One of the most obvious is ViewMax. It uses graphic symbols of file folders and printed pages to show where your files are stored on a disk. Of course, you can use the old-fashioned directory lists just like regular DOS. Or you can see files in a third depiction called a "tree" with each directory on your hard disk displayed as if it were a "branch" of the tree.

One of the small but important advantages of DR DOS over DOS is the ability to change the size and blink rate of the cursor. That is particularly helpful on laptop computers where the cursor often gets lost on a dim screen.

If your computer has an 80286 or 80386 microprocessor, DR DOS has special memory-management software that lets you reduce the amount of the normal memory (up to 640 kilobytes) occupied by the operating system itself, which frees up more memory for larger application programs, larger files or to use more memory-resident utility programs such as Sidekick or Hotline II.

DR DOS also can convert extended memory greater than 1 megabyte in a computer into a form called expanded memory, which is more commonly used by software programs. Such memory management software has typically been purchased separately by computer users to overcome DOS's limitations, or obtained with the purchase of memory-hungry programs such as Microsoft's Windows.

One important feature for today's computers with larger hard disks is DR DOS's ability to manage disks as large as 512 megabytes (1 megabyte equals 1 million characters) of storage as a single drive. Most versions of MS-DOS are limited to drives of 32 megabytes or less, so large-capacity hard disks have to be artificially divided into multiple logical drive units called partitions. But with DR DOS -- as well as IBM DOS 4.0 and Microsoft DOS version 3.31 -- the entire disk up to 512 megabytes can be addressed at once, providing room for very large files and lots of programs.

A familiar task to DOS users is the need to repeatedly type the same or similar commands when performing housekeeping chores such as deleting, copying or renaming files. DR DOS helps by keeping track of your past commands and redisplaying them on the screen, one after another, so that you can reuse or modify them instead of typing them again.

Perhaps the best DR DOS feature is a program called Editor. It is a full-screen text editor instead of tedious one-line-at-a-time editor of regular DOS. Editor works like a simple word processor to display and edit the entire contents of a text file. It isn't meant to substitute for a word processor, however, and has no page formatting ability or other document enhancements.

Readers' comments are welcomed, but the author cannot respond individually to letters. Write to Richard O'Reilly, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.