Old thread, but fun.
Pretty hard to argue with the logic that a box-store bike isnt really a bike...by certain standards.
But I know a 16-year-old kid that has a green Wally fatbike with disc brakes and 12 speeds. Yeah, its still a pig; he's using the 27TPI Nates I'll never ask to be returned, but he's riding.
My stepdad introduced me to an old guy in a little N. MN town a few years ago...he's the "bike guy" in his town. Big old brick garage behind his house, 3 bike stands, and probably 300 bikes in various stages of rot/disassembly behind, and 40 or so out front "for sale/take trades" He's usually got one or two of his retired buddies hanging out and usually a kid or two working off bikes/parts. He probably makes $1 a day at it.
One of his "specialties" is for any parent that buys their kid a box store bike, he will tune, lube, and safety inspect it for $5. For $1 if the kid does it while he mentors.
He does about 50 every year. Because the town is in a somewhat low-income area, that Next bike may be the only shiny new bike a kid gets...and shiny and new has value when you never see it.
I dont think many people buy those with any illusions of substituting them for the real thing. A few will find them a "gateway drug" to better bikes and a more serious attitude. When I was a kid, the local Schwinn store had a dozen or so cantilever cruisers, 25 stngrays, 10 or so "English lighweights" and one of each size drop bar roadies...probably Collegiates with heavy ashtabula cranks, steel rims, and carbon-steel welded frames. None of them was a pro-level bike. You had to drive 120 miles to get that.
Have things changed all that much?