This isn't quite right, Windows Me was a stopgap between Windows 98 and Windows XP. Microsoft had no intention of keeping anyone on Me for long. There were already plans to get consumers onto an NT-based OS when Me launched, the initial version of this was codenamed Neptune.

> Microsoft discussed a plan to delay Neptune in favor of an interim OS known as "Asteroid", which would have been an update to Windows 2000 (Windows NT 5.0), and have a consumer-oriented version. At the WinHEC conference on April 7, 1999, Steve Ballmer announced an updated version of Windows 98 known as Windows Millennium, breaking a promise made by Microsoft CEO Bill Gates in 1998 that Windows 98 would be the final consumer-oriented version of Windows to use the MS-DOS architecture. [0]

So XP was not a reaction to Me's reception, it was already in the works as a replacement when Me came out.

[0] https://en.wikipedia.org/wiki/Development_of_Windows_XP

I feel like everyone is forgetting Windows 2000, which IMO is the best Windows that MS ever released. The main problem with it was hardware support, since people were hesitant to move away from the 95/98/ME line, and hardware manufacturers were still playing catch-up, as most didn't support NT 3/4 at the time and didn't see a need, as it was largely a server/business OS. But otherwise it was rock solid, fast, and a breath of fresh air.

I did try XP here and there, but was instantly turned off by the cartoonish default theme (yes, I know you could change it). It was buggier than Win2k, and I didn't have the patience to wait around until they fixed it. I was told later on by people in the know that Service Pack 3 was the bees knees, but by then I'd moved on to Linux full-time (with some jaunts into OS X) and felt no need to come back.

Nope, XP was the introduction of Windows NT linage into mainstream computing, ME was basically 98 with a few goodies to keep selling newer 9x versions in the meantime.