Steve Ballmer is keenly aware that more than a few investors have the knives out for ‘under-performing’ divisions like the Xbox and Bing, but he’s determined to shut them up. In his last-ever shareholder meeting, the outgoing Microsoft CEO reiterated his belief in the company’s search engine and games console, saying that both divisions are vital to its future, reported GeekWire.

Rumors that whoever takes over Ballmer’s CEO job might decide to dump Bing and the Xbox emerged last week, when one of the main candidates for the job, ex-Nokia boss Stephen Elop, was reported as saying that he’d consider selling them off:

As Bloomberg reported:

“Besides emphasizing Office, Elop would be prepared to sell or shut down major businesses to sharpen the company’s focus, the people said. He would consider ending Microsoft’s costly effort to take on Google with its Bing search engine, and would also consider selling healthy businesses such as the Xbox game console if he determined they weren’t critical to the company’s strategy, the people said.”

Meanwhile, Nomura analyst Rick Sherlund, who said that Ford’s CEO Alan Mulally is “likely” to get the Microsoft CEO job, also voiced his opinion that it would be better off without Bing and Xbox, according to BusinessInsider:

“So what’s the plan for Mulally when he takes over Microsoft? In Sherlund’s mind, it’s time to dump two major anchors — Bing and Xbox. Combined, he thinks Bing and Xbox are losing $3-$4 billion a year, which is a $0.30-$0.40 drag on EPS. He thinks Microsoft should give away or sell Bing, and spin out or sell Xbox.”

Bing and Xbox might not be all that profitable, but that doesn’t mean they’re not valuable to the company, as Ballmer reiterated once again in his speech yesterday, calling them “key parts of Microsoft’s broader vision”.

According to Ballmer, the Xbox One is one of the fruits of Microsoft’s strategy as it attempts to unify its devices and services. The Xbox One is “a reflection of what is possible when a company, our company, is unified under a common vision.”

As far as Bing goes, it isn’t just a “search engine”, but also an integral part of the company’s efforts to improve its Windows Azure platform.

Ballmer has made his fair share of goofs in the past, but as far as the Xbox and Bing is concerned, he’s dead right. The Xbox One is so much more than just a console – its the cornerstone of Microsoft’s push into the living room and entertainment spheres. Microsoft is embroiled in an almighty scrap Google and Apple over everything from hardware and software to services and media, and the Xbox is one of its biggest advantages – neither of its main rivals has anything to rival it, and the Xbox doesn’t just deliver games, but a rich variety of media and services besides.

Meanwhile Bing is equally important. It might be an inferior search engine to Google in the eyes of many consumers, but as Ballmer points out there’s a lot more to it than that. Bing is being wired into a number of Microsoft’s core products, including Windows 8, where it powers various apps that deliver multimedia and information from the web, as well as Azure.

Nomura might be correct about the cost-effectiveness of maintaining Bing and the Xbox, but Microsoft’s short-term stock prices are irrelevant compared to its longer term health. Bing and Xbox remain vital to the company’s future plans, and even if they can’t make it any money, Microsoft would be a lot poorer without them.

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