Windows Millennium was the original announced shipping name of what became known as Windows ME; a "cute" shortening of "Windows Millennium Edition". This subtle difference was a marketing strategy to give Windows ME the firm foothold in the consumer sector as a down-to-earth, "real person" OS. The name Windows 2000 had already been taken by a previous marketing move to push the Windows NT kernel as the next home and consumer operating system. When the some of the consumer goals of Windows 2000 looked as if they were not going to be met, Windows ME had to be born, both to give Windows 98 a much needed technical update, and for Microsoft to give people a round of upgrades (something the market craves).
Millennium originally started as a consumer OS project made from cut dream features off of Windows 98 (as every project looks at what didn't make it in before). The features that quickly became important were ones based on the obvious problems that face Memphis; registry corruption, hardware control and PnP, trying to lessen the amount of reboots needed, etc. What eventually became very important was the notion of PC Health; the ability for a computer to detect symptoms of a generically complex problem and to take measures to correct those problems.
And thus, PC Health became the new name of the team and the project, taking many lessons from the NT counterparts. The focus was to study complex computer problems and to come up with solutions to solve most of them. There were still remnants of the old NT vs. 9x rivalry left, but everyone knew that NT was the victor this time. Windows 2000 learned a few tricks from Windows 9x, and vice versa, but most of all, people knew that the future was going to be NT.
The Millennium project strayed away from many items common to the Win9x line. First off, Windows ME eventually had a bar higher than a 486. Previously, Windows 98 Second Edition needed only a 66 Mhz processor or higher to run (with some RAM and drive space, of course). This was a huge step for the product (meaning Pentium optimizations could be performed, etc), without a good deal of loss. Many people had turned their 486s into coffee tables and routers by now; there was little market in legacy PCs. Windows ME eventually became pitched as an upgrade OS to many people. With the previous releases, you would see an even mix of upgrade and "for PCs without Windows" packages, Windows ME took note of the Windows saturation in the market, and sold primarily as a (seemingly largely unneeded) upgrade. Vendors (OEMs) now ship this on many of their consumer products, as it is the most recent and largely supported. Windows Millennium also added a few fairly obscure API calls (some that not even Windows 2000 supports), but because of their narrowness of platform, they are not widely used, if at all.
Millennium eventually became a small (relatively speaking) graveyard project. The focus was to refresh the consumer OS, patch a bunch of bugs (as much as possible), toss in the new PC health features, ship a new Windows Media Player, a new Direct X, add some video editing software to compete with Apple's iMovie, and call it a release. The team members actually got jackets saying: "Millennium: The cleanup crew." Many of the wondrous plans of one final outing for Chicago and crew ended up mostly being rolled into Windows 2000, and a small upgrade for Windows 98 SE, which (a year after the release of ME) holds the majority of the Windows PC install base.
The glorious Windows Millennium is dead, and all that is left is a hollowed shell we now call Windows ME. It is soon to be replaced by a unified (consumer and business) NT offering, with the compatibility and device support lacking in Windows 2000, in the form of Windows XP.
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