First of all: No console, no handheld is failing regarding sales this generation. They are all selling in a range between decent and great. I think none of the 5 systems will have sold less than 30 mio units (maybe even not less than 40 mio) when their successors arrive.
The main reason why the 360 is not selling better than PS3 in "Others" - which is the real problem region in the long run for Microsoft - is simple in my opinion:
Many people in Europe consider the 360 lineup to be too similar to the PC lineup (and PC gaming is still big in Europe, so I assume that many EU gamers think: Why buy a 360 when I can play great games like Mass Effect, Gears of War and Bioshock a few months later on my PC anyway? Furthermore, PC games are cheaper)
To make a platform something special, its most important games have to be exclusive for the company's systems:
- Super Mario, Zelda, Wii Sports/Fit and Pokémon are not available on a platform ouside Nintendo's
- Gran Turismo, SingStar, God of War and LPB are not available on a platform outside Sony's
- Most important: The main 1st party games of both, Sony & Nintendo, are not available on PCs (except Everquest afaik)
