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Dead is harsh...

Life support and ready to pull plugs is probably a better way to put it.

The 360 is outselling the original xbox in Japan by a large margin. I think Microsoft is definately disappointed but I doubt they are overly shocked.

Sony on the other hand has to be concerned. If someone would have said that Sony would dip below 10,000 units a week in Japan after a year and a half on the market before launch I would have laughed myself to the floor. I doubt there is much laughing at Sony in Japan right now.