Well, I believe the point isn't even about if the division is good for the company or not. Nadella made clear that Bill Gates will be more active on the company once again, so he doesn't looks to be a guy that will challenge the status quo, but one that will keep things like they are. It's not a critic and I'm not saying that one option is right or wrong, but he already showed what he will do with his actions.
Now, if I was in his position, I would keep the division. Even if it doesn't profit a lot compared to others, it at least isn't hurting them and allows for a better position in the consumer space. We could divide MS in their corporate business, that are doing great and their consumer business, that is not so great. They have Surface (won't go anywhere important), Windows Phone (it's dead) and Bing (same as the others) as consumer oriented products. None of these will work. XBox is their consumer oriented product that really worked, so they won't ditch it as easily, specially without trying the unification of XBox, Win8 and WP8 first.
I only see they killing XBox if both of these things occur:
- They grow tired of WP8, Surface and Bing, ending those products so XB becomes their only consumer product
- Bad XBox sales
In the end the question isn't if they will keep XBox, is if they will be a consumer oriented company or a consumer/business oriented company. Right now they are a business oriented one with some consumer things.