: "If you can't connect, don't buy our new product as it won't work for
: you" is effectively what Mattrick said.

He didn't say "don't buy our product" - nothing of the sort!
He said 360 is for you.
And it is.
Xbox One is designed for people who will connect consistently. If you're not one of those people, then logically, Xbox One isn't for you. 360 remains fully supported and is even getting a new sku, plus more games lined up. Because they know there are gamers who aren't always connected. And so 360 remains the prime console for 'offline' gamers.

: I work in IT myself and I'm pretty sure if I said something similar to a
: client, I'd be cleaning out my desk before long.

Not if the (not yet a) client is not your target market. If I sold apples, and someone asked to buy a car from me, am I arrogant to pass you off to someone who sells cars, because I don't? Or maybe I only sell apples by the carton. If you asked to buy one apple, am I stupid to say I don't sell single apples? (analogies are imperfect; yes it could go much deeper)

XBO is a new piece of hardware. At this point, it has no 'clients', only potential clients - and the ones they are dedicated to are the ones who have consistent internet connection. The product simply isn't for people who don't/won't do that. It's not an insult to encourage potential clients to purchase another product which suits them better - to stick with the 360.

: I love the way Mattrick presents the argument as if he's come up with it
: himself (actually he probably did because it's insanely stupid).

It was an obvious answer, and really the only logical and honest one. He was smart to point back to the 360 (and thus the new sku) instead of just letting it stand saying the Xbox One isn't for you.

: It's just terrible from a business perspective and it's insulting to gamers.

I don't see that.
I could be seen as a dumb move in general from a business perspective, but MS will have taken that into account when they consciously decided to go this bold, HIGHLY risky direction. But insulting? Sit back, relax, man...

: I posted way up in this huge mess of comments that Xbox One's restrictions
: won't actually affect me too much but, between the over inflated price and
: MS's attitude, I'm not sure I'll want to upgrade - sad really, as all the
: games I want to play are on the Xbox One.

Well, if you choose not to buy it on principle, then that's your choice. Vote with your wallet! I don't see attitude tho, just a very very risky business decision which they're defending (made worse by the hole they left open for PS community to attack).

: It's funny that MS probably had their best E3 for years (in terms of their
: main show) but everyone's forgotten that within 5 minutes as MS keep
: handing out ammunition to use against the Xbox One.

Sony capitalized on a weak spot. They 'won' really by doing nothing. Just stating that things will remain just the same. If they hadn't had those small segments re used games and arguably the price cut, Sony and MS's pressers would have been going through the usual comparisons and debates about game lineups and hardware capabilities. As it is, one predictable sentiment they expressed, specifically to combat Microsoft's perception to community, won them the conference.