It's got nothing to do with I want it now generation - so don't be so rude ;)

Wow... its not a big deal anymore but if they never did a 180 then it would have being they wanted all your content on the hdd. Thats really short sighted. Imagine the whiplash they would have got if this came out before tjey changed. Good thing for them thats not the case now

I don't know if it will be as bad on the PS4/XboxOne, havent got one yet. :)

Look I buy lots of games, I play lots of games. What I dont want to have to do is keep removing and re-installing the same games. Deleting might not take long, but installing can.

I am probably like a lot of gamers, I dont necessarily finish one game and then play another, I have multiple games on the go or leave them installed so i can go back to them. If i have to remove some, I might find that i have to reinstall it. It's even worse if you have kids, because they also install games on the console. As soon as you get to the limit of your hard disk it starts to become a problem (well for me anyway :)

A bigger hard disk fixes that issue. :)

But you got a very fast connection with decent ping. Last time I checked, my connection had ~14Mbps DL, 36ms ping BEST CASE, but ~8Mbps DL, 495ms ping in the worst case for ping and ~1.2Mbps DL, 45ms ping in the worst case for bandwidth (UL goes from ~0.5Mbps to ~1Mbps), so streaming HD content wouldn't be a comfortable option, storing and playing is the only option that will deliver quality. Except the worst cases, mine is a quite average connection in most zones, in France they get a little more for quite less money, but more than 20Mbps is still quite rare in Europe and in most other places, except where optical fibre is available (even in that case, base contracts won't us it at its full potential).
Anyhow, they said they'll add external storage support later and they'll do it, but it just looks funny it isn't there since the start in a box touted as console with a lot of other entertainment functions. It looks like somebody at MS is having fun causing embarrassment to PR guys. 

For people wanting to use the XBOne as their sole media box, external storage support is necessary, as for most connections HD streaming from internet isn't a viable option, so downloading and storing or caching is a necessity.
BTW, using a plain USB HDD through XBOne (or any other console) is a cheaper option than a console + a media server. For lazy people there is also the advantage of having to learn how to use just the console. And isn't MS goal to make XBOne the central hub for all the entertainment devices?

Just to clarify there is no waiting for the game to install, it happens in the background while you play. I imagine it will work in a similar way to the original Xbox in that load times will be longer until the files have finished copying.

If it supports network sharing then it can still be used as the media hub. 

Sure, but until they add external storage support, you need a media server for that streaming, instead of a far cheaper plain and simple USB HDD. It's not a terrible flaw, also because they said they'll add that support later, it's just a clumsy move to not support it from the start, also considering that it's quite trivial, USB storage support is provided also with the cheapest motherboards, costing at retail less than 1/10 of XBOne.

Or you know a portable HDD hooked to your computer? For the price of a high storage flash drive you could get a 500GB external HDD and use it on your PC to stream media. Heck when the Xbox One finally supports external you can use it with that! No media server needed. Your PC can act as one. 

Yes, I know this solution too could work, but with that support since the start, people, if they want, could put together an even more minimalist setup, composed of just a XBOne and an external HDD, neither media server nor PC needed. This is what MS seems to suggest with its marketing, and this will surely be possible after they add external storage support, providing it since the start would have been better, not doing it after having stressed so much XBOnes multimedia capabilities is just clumsy and nothing worse than it, no need to bash MS about it, it's just that seeing it doing so many clumsy moves, that it is anyway solving faster than in the past, is quite curious. I wonder if some of these things are related to the transition period with Ballmer leaving the CEO psition, and in this case, what's the cause-effect relation.