The problem isn't the concept that it's gimped. The problem is that Microsoft being Microsoft are almost certainly going to start breaking their own rules and require that the user has a hard drive, thus screwing the Core user. Moreover, the deal Microsoft's been offering makes it an insult to those with less money. For a $100 saving, now reduced to $70 (or was it $80?), the user loses the ability to save games, loses the ability to download games, loses the ability to go online at all, loses the HD cables, loses the ability to play Xbox1 games and loses wireless controlers. Oh, and the chrome finish, as if to add insult. It's a lot to lose for a saving on what is still a more expensive machine than Wii.
To attain even basic functionality (I mean, who really plays games without having some form of save at all?) the user absolutely MUST buy a memory card, reducing the price differential from $70 to $30 - $40. This is getting so ridiculously unfavourable for the consumer that those who are strapped for cash are more likely to give up on the whole affair or buy something cheaper rather than try to manage with the Core.