Nintendo's original GameBoy console was very successful due to its long battery life, light weight and cheap price. The only problem was that it only had a black and white screen. Its main competitors, the Sega Game Gear and the Atari Lynx both had colour screens, but having these meant that the batteries wouldn't last long, it would be heavier and the price would be very high. It is for this reason that it took Nintendo years of research into this technology before they came up with a colour portable of their own that would still have the long battery life, light weight and cheap price that made their original system sell so well.
The goal of Nintendo's Project Atlantis was to build a 32-bit colour handheld that was backwards compatible. Work began on this project in the mid-1990s and by 1998, Nintendo had come up with the GameBoy Color. While it is colour, portable and backwards compatible with original GameBoy games, it is not 32-bit. It is essentially the same as the original GameBoy but in colour. 32-bit technology would have still been too expensive to produce at this time (but was achieved a few years later in the GameBoy Advance).
The GameBoy Color was released on October 21st 1998 in Japan and November 18th in North America. It allowed players to add colour to original GameBoy games by choosing from almost 13 different colour palettes (ranging from 7-10 colours each). Other new features were added to the GBC including an infrared communications port which allows data to be exchanged between systems without the use of cables.
The GameBoy Color did very well on the market since it had basically no competition. It was followed a few years later by the GameBoy Advance.