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The mindblowing stupidity part is not aimed at the update itself, rather the statement about the update.

"I think when people come to Xbox they're not really looking so much for functional"..."want o be wowed (instead)".

Its not like this is a big thing, its just a small search function. Imagine the meeting when they sat down to discuss this.
- "So first, a search engine would be nice so you can find what they are looking for fast, right?"
- "Naah.. the people dont want that."
- "Oh.. i just thought.. ?"
- "No. Instead we need to Wow them"
- "Okay. So what do you suggest?"
- "Uh.. i dunno? - But lets hold off on the search thingy, okay. Searching for movies. Ha! You crazy."