Despite Sonic the Hedgehog being a gaming icon created by a Japanese company, the franchise itself has had little to zero selling power in its home market.  Not a single mainline (platforming) Sonic game has crossed the 1 million sales mark in Japan, with the highest selling game being Sonic Adventure on the Dreamcast, having sold nearly 500k copies:

http://www.vgchartz.com/gamedb/?name=sonic&publisher=&platform=&genre=Platform&minSales=0&results=200

In fact, SEGA hardware itself has done just as poorly in its home region despite having considerable success in other regions:

http://www.vgchartz.com/analysis/platform_totals/

SEGA had a definite advantage over Nintendo in the West during the 90's because of their "hip/edgy" image which gave them a great amount of sway in that market.  However, I feel at the same time it failed to appeal to Japan the same way it did America or Europe. 

Can anyone offer more insight into this?

It's because SOA defined the company and was the only branch with any brains. If not for SOA, Sega wouldn't have made it out of the 16-bit era.

Sonic is too badass for Japan.

Or Japan has good tastes. 

Because the Japanese have games like School Girl Zombie Hunter PV2 which gives the girls the ability to rip off there clothes to use as decoys. Imagine that. Sonic is pretty dull compared to that.

So... is mostly ignoring home console for portables good taste aswell? Very debatable isn't it?

It's just a prank bro. 

I want to say "good taste", but this is the country that loves mobile crap we're talking about here.

Sonic is one step too far.

Sonic the Hedgehog, since his concept phase, was always target character. Everything about Sonic is western inspired.