Xbox may fail on its own. If the Xbox division were to be spun off, it might be good for Microsoft, but the resulting company would face some big problems. There is only one big independent gaming hardware company: Nintendo. Nintendo is not a particularly strong performer, and manages to keep its business by operating differently to the Microsoft Corporation's Xbox.
Nintendo rarely releases expensive games consoles with the latest and greatest hardware, nor do they wrangle with publishers on exclusivity for major titles. The big expenses involved in running a game hardware company, particularly as a new console is being launched, means that cash reserves are needed.