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I entirely agree with Zim and c0rd on this now.
The way westerners with obviously no knowledge of japanese culture or way of thinking, are stereotyping japanese consumers is just plain silly. It's typical westerner way of thinking applied to the japanese, just in reverse.
Zim and c0rd explanations just strike a chord with me, none of the other explanation do.

And yes, I'm a westerner, with some knowledge of japanese culture (I'm not an expert), and I just happen to have very japanese aligned tastes (or so it seems to this day). And the XB360 is just completely unapealing to me, except perhaps one or two games (only Tales of Vesperia comes to my mind right now).
Most westerners saying japanese don't buy the XB360 because they're xenophobic :
- are head deep in HD nonsense that japanese people just don't put so high on the value chart
- would not buy a horse race tycoon game or a train driving game
- believe the XB360 has all the best games
Which just shows how out there they are.

OT, MS is not responsible for any major part of the japanese market being down.
Even if they pay for that, the blame mostly goes to the japanese devs/publishers, who accepted to risk destroying their franchises (long term effect) for money (short term effect).
I'll always say this was a stupid move, whose results will become worse and more obvious as time passes (IMHO).