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Ok, one thing: Japanese love American stuff. They even pay big money for vintage Levi's jeans etc. And iPod isn't exactly bombing over there.

I think it has partly to do with brand. Nintendo and Sony are so enormously well known there that it's hard for MS to capture marketshare. Plus the image of Xbox is very much western shooters. The new RPG's should help. Image building can be a slow process. 360 is already doing a lot better than the original Xbox.