Define "dead"...
IMO, you'd define a dead system that has a continuously reducing trend of sales, with no hope of any sort of trend to increase.
The Gamecube, Dreamcast, and Xbox come to mind. Each had good/ok debuts, followed by ever-decreasing sales, and ended up being very dead within 2-3 years.
The Xbox 360 is not that way. It had absolutely horrid sales, but has been trending up the entire year. It's software sales are about 60% of the PS3. Versus last year, the X360's week-to-week sales have beaten every week last year, except for one (N3's debut). To me, that's a positive sign.
Is it dead to become competitive versus the PS3 or Wii? Absolutely. It was dead on arrival. Is it dead in the way that it's trending to become an ever-increasing abysmal failure? Absolutely not. The X360, in under 2 years, has already overtaken the Xbox's previous sales records, in a time when Europe is maybe 60% near the Xbox's LTD sales, and US sales are maybe at 70%. That's a huge improvement. It's a huge improvement on an abysmal failure, but still.
So in my opinion, it's certainly alive. It's the "master of it's own destiny". If MS keeps pumping out day-and-date multiplatform titles, sprinked with a few Japanese-made exclusives here and there, and the yearly Mistwaker title, Microsoft can and will carve out a niche fanbase of 1.5-2.5m users. That's a very impressive number for a system that opened up with a paltry 40,000 systems sold first week.
Back from the dead, I'm afraid.
