I think there are a few key elements behind PS3
1) I just don't think that Japan is rushing to notion of HD gaming nor is swayed by 'power' specs
2) PS3 just doesn't have enough titles being released regularly
3) PS2 is still getting far more support for local games (look at that list) but its already at saturation point
So I think PS3 can turnaround in Japan (PSP essentially proves it) but its not got what it would take right now - i.e. titles/regularity to warrant a steady, sustained growth in average weekly sales, nor is market quite embracing it for HD gaming / BR combo.
Of course with BR winning format war and BR adoption seeming to pick up pace in Japan the second issue might solve itself (as I think it did to an extent with PSP) but the first issue will need either luck or a concerted effort on Sony's part. If I was them I wouldn't leave it to luck...
Try to be reasonable... its easier than you think...
