We're all on the same side here. We all support Microsoft's long term vision, or we at least share the views of technology enthusiasts. Unfortunately, that isn't a majority view, and society has setup a system that ascribes value to something very different! MS' institutional investors care not one iota that Xbox
isn't a viable stand alone business. What they do care about is that the Xbox division is a drag on Microsoft's stock value, profitability and dividend payouts. That they would be killing Xbox is completely irrelevant to them. That's just modern capitalism.
I'm not sure it is correct to call such a large slice of the population "nut jobs". Real nut jobs rarely wield as much power as these people do. Selfish, parasitic, self aggrandizing, yes, absolutely, but not crazy.
Considering that Microsoft's Xbox division
has lost billions over the last decade, and I'm sure these people have no more patience to let MS spend more money on their Xbox "sideshow". I'm sure that the Xbox console not being subsidized is a consequence of their influence. If that higher price causes the Xbox One to be uncompetitive against the subsidized PS4, then it will be just another reason to scrap the division.
These people have no love for technology (at least not in their professional role), or the patience for a long term vision to play out. As you said, their job is to siphon off as much money as they can within a "useful" timeframe (under five years), which is why it simply doesn't matter what would happen to an independent Xbox division.
I suspect they will be too, but at this point they really have no choice. IMHO it's be profitable or die. The Xbox One doesn't cost $100 more than the PS4 because it's that much more expensive to build.