The Xbox 360 has diversity....It has more sports games, RPGs, racing, than any other console on the market currently.
The issue more has to do with the "image" of the Xbox 360 being a hardcore-fairing box, and little/no name brand recognition with casuals and casual/core users. Microsoft has done alot to change that - the X360 has already outsold the Xbox in Japan, and most asiatic markets as far as I know.
And then it has to do with what Western developers decide to put on the Xbox 360 - unlike the Wii and PS3, Microsoft has had a much harder battle bridging the pacific ocean when it comes to working with the Japanese studios on X360 games - unlike Sony and Nintendo, since it's their native country. The few AAA Japanese games to come out on the X360 have been hits in their own, various rights (such as Blue Dragon, Dead Rising, Lost Planet, ect).
Back from the dead, I'm afraid.
