You seem to be confused between long term vision for MS as a whole, and vision for Xbox. Xbox is not integral to MS, never has been, never will be. MS got into consoles as a rearguard action. And now consoles pretty much don't matter in the grand scheme of global electronics and computer domination. So MS's long term vision needs to be all about tablets and mobile. MS may continue to think that it's necessary to be present in the console space for as long as consoles are around. But consoles have never been vital to MS's ambitions.

What do you mean that the Xbox is not integral to MS.  Where are you basing this information from.  So are you telling me that MS does not want a console on the market with an established fanbase to still conbat their competitiors like Amazon, Google and probably Apple at some time.  So you are saying that MS still does not want to have a presense within the Home and have a footprint on the number one entertainment hardware which is the TV.

The reality is  who cares if the Xbox division is vital to MS business. MS sell a lot of products and spend billions on them that are not vital to their business.  As long as MS is willing to continue to fund development and growth within the department, that is all that is needed.  If MS is willing to fund 1 billion or better to keep the department running smooth so that Phil has the resources to continue to make a solid if not great product then where is the problem.  The confusion is most people posting here thinking that the Xbox division has to be vital to MS but instead, the Xbox unit needs to be revelant to MS and also stand on its own.  

Neither Apple, Google or Amazon really have a gaming console. Especially not a $500 behemoth. They have a small, neat box for about $99 that can be used for TV and Candy Crush.

Sony gets it with PSTV, although I think that it will not be a success for them. XBox brand can still be salvaged in the US, and probably by going smaller. But, as usual with hardware, they are just too late to the party, and will probably stay a bit player in the TV accessory/streaming business.

As I said in another thread, MS is slowly starting to divest XBox console from their portfolio, first by declaring it non-essential, then by shutting down its TV/Entertainment branch, and today by scaling down its presence outside of North America. 

Its not what Apple, google or Amazon have today, its what their future endevors will be in the future.  No corporation waits to see what their rivals will do but instead plan years ahead on how they will impact the market.  MS knows their rivals will have entries into the market.  Right now, Amazon and Goole have what I call entry level products, priced very low and only seen as very budget devices.  MS and Sony have the high end which are consoles that do the same thing but have a more richer development and higher end software.  Sony also have their low end budget device as you mentioned and I am going to assume that MS will also deliver such a device as well or concentrate more to add that functionality within a phone (which is probably the best way to go if you ask me).

@Bolded:  How is it that MS shut down the TV part of the Xbox them divesting in the console.  If anything, it shows that they are going to a stragety that was promised by Phil.  The TV/Entertaiment branch was Don M ideal.  Phil has stated they are going to concentrate on games and more core games.  Every move he has made can be reflected on his statments.  Close down TV arm, not core to gamers.  Move kinect from Bundle, not core to gamers.  Staff more people in their 1st party Developers.  The fact that MS is still hiring developers to their first party studios, filling out roles for their next iteration of the Xbox hardware sure does not look like they are divesting or scaling down the Xbox division, instead they are putting the resources where it couts.

Scaling down people in Europe is not scaling down what they do there.  This is a misconception from people who do not understand how big MS as a company is.  I already made a statement on this point so I will not go back into details but until people know how the distribution of resources will be done, only speculation can be made.

Edited for errors

Presence =/= integral. Plenty of companies have a presence in a product category as a defensive strategy which is not integral to the company's vision. Check what Xbox contributes to MS's profits and you will see how integral it is to them.

You think a presence in 84 million houses globally is a big thing? It's not, it's pathetic market penetration. So is being present in 150 million houses (PS2). If you want a product to be integral to the "ownership" of  the living room then history shows us consoles are not the way to do it.

Apparently PC is present in 900 million houses globally. Now that's a big thing. Better would be to find a strategy to put PC onto the TV screen..oh wait we already have it, TV with wifi capability.

How do you think MS is going to keep selling you those services they have.  From music, TV, Movies and games.  Even on the back end MS has great opportunity to tie in developers and publishers to Azure platform.  The Xbox is what you call an add on piece.  It complements MS core products and allows them to extend those services to consumers homes.  Integral means you have multiple devices that deliver your services and backend process not just one.  Its one of the main reason, MS is selling phones, tablets and consoles.  This whole digital life they continue to talk about is a mutiple part stragety to get their products and services into consumers homes.  Xbox is not just about the hardware but also the software and services tied to the brand.  Each have a role in the broader market goal which is to bring MS products and services to consumers.  As the PC fade more as a product for consumers, phones, tablets and consoles start to move into those roles.

I believe you have to stop looking at the Xbox as this island separated from MS core products but instead look at it as the bridge that get those core products to different islands/mainland areas.  The bridge is just as important as the stuff moving on them even if you have multiple different ways to transport your services.

as long, as no1 other using xbox video / xbox music and xbox live gold for ms
thats waht matters to them

Its never been integral. The only reason for the Xbox existing is to stop Sony. Its not adding to MS bottom line.

Not very long tbo, everything they've had a "vision" for this console seems to be completely failing to them so they are left scrambling to reverse their methods. If the share holders want the division sold, how long will Microsoft test their patience?

I'm jumping in at the tail end here, so please excuse any misunderstanding I may have, but are you submitting that the XBone and PS4 are meant to battle disruptive Apple/Google/Amazon devices by catering to the upper end of the upmarket?