At the time many of those games came out in Japan, they were only available on 360 and not on PS3. So MS did give incentive for the Japanese gamers to pick up the 360.

The PSP was incredibely popular in the USA specifically as a portable multimedia player. Now that everyone has a smartphone there is almost no market for such a device. There is absolutely nothing that can be done to turn that around. It is actually pretty similar to the Wii U situation, where the wii build a huge audience of people who will never buy another console again. 

Not going to try to guess why the 360 isn't popular in Japan as I don't live there.  

No, that's not what I'm saying.  Microsoft, for various reasons, had a lot of trouble in Japan, including missing out on some games that Playstation got.  They also flubbed with that controller, which the Japanese hated.  They had PR and image problems.  They pissed off Japanese publishers by trying to do business with western methods.  Lots of factors added up to the Xbox brand being scorned.  Microsoft bought a few exclusives and missed out on dozens more.

The 'racism' thing always cracks me up, though, when there are hundreds of western brands doing very well in Japan.  There are like a thousand KFC restaurants there, yet they won't have anything to do with non-Japanese brands?  Hah.

When did I ever say it was anything to do with racism, or patriotism, which seems to be the politically correct term nowadays?

I was only implying that your argument of Xbox not having any Japanese centric games was simply not true when the Xbox initially came out. It is true now though.

The second part wasn't directed at you, it was a general statement.

I'm not saying that Xbox didn't have Japanese games, just that it was not enough in the face of the competition.

re: Vita, the poster with the picture of iPhone and the other commenting on media player capabilties is spot one.
USA is where iPhone took off, and triggered a sea change in consumer electronics. people are spending more money on these fancy phones that can do most things a portable console could do, and more. movies were a big push with PSP, but that is defunct with smartphones/tablets, and smartphone/tablet gaming has taken off in a huge way. even if that isn't directly comparable to dedicated consoles, that is consumer money going outside the dedicated console ecosystem to fulfill entertainment/gaming. there's only so much free time, and if you found a new use for it, then you don't have time for the other stuff. same goes for other things people stare at their smartphones for: facebook, etc, etc. Vita especially is impacted because it is the more expensive handhold console, so it's purchase is more directly in opposition to somebody buying a new fancy smartphone.

Japan/360, MS just never had it together, I've seen how they didn't get developer relations with Japanese industry, and they just didn't push the right buttons. Chauvinism played/plays a part, but 360 just never challenged the PS3 for the role of 'hardcore game console' that Japanese have in mind for that sector. With Wii's mega success on the other side, there was no reason for Japanese to consider 360. The few exclusives that were bought probably seemed like desperate attempts that didn't change the overall picture.

http://mobile.nytimes.com/2013/08/12/business/global/korean-companies-gain-traction-in-japan.html?from=business

Even if you had said it you wouldn't be totally wrong.

For the 360, its a combination of the Japanese preferring to buy their own home grown consoles and Microsoft's tendency to only appeal to the English speaking nations.

For the Vita, handheld gaming is less popular in the U.S. and a lot of the games it gets don't really appeal to the American audience.

I got both of those games on 360!