Re: "However it is really difficult for them to change"
> Windows users do expect compatibility at the binary level.
Most Windows users do not know that there are computers that are not x86. 'Binary incompatibility' is not a concept they are aware of. When Windows RT was available they expected to be able to run their existing applications on it. When Windows 10 IOT was announced for running on Raspberry Pi they thought they would be able to use a $35 computer to run a full desktop and Halo 5.
> The only problem came when AMD dropped the Virtual86 mode in 64 bit mode so Windows 64 bit could no longer run 16 bit applications outside a full virtual machine.
> It was an AMD decision, nor Microsoft nor Intel took it.
Intel and Microsoft were perfectly free to continue developing Itanium for their 64bit systems. Of course those didn't do Virtual86 either, and neither did it do x86 32bit (except by emulation).
> Going from 32 to 64 bit was so simple nobody really noticed it happened, but the availability of far more RAM.
That was directly the result of an _AMD_ decision !!! Microsoft and Intel had to change course from their 'Itanic' decision to follow AMD.
The instructions added to make x86 into AMD64 overlapped with some of the old 16bit instructions. This was a technical issue because the instruction set has a finite number of different operation codes. Thus the chip can _either_ do V86 _or_ AMD64.
The 8086 (and later) couldn't do 8080 or 8085 either*. That was an Intel decision. Old stuff gets dropped, get over it.
* actually the NEC V20 and V30 chips could do both 8086 and 8080.