MS Have a very clever strategy in japan what they are doing is lulling their competition (the PS3) into a false sense of security by selling almost no consoles or software. - Then when the PS3 and Sony are sitting there idle thinking how good they are X360 will strike with a massive advertising campaign , new games releases ( as someone stated before 360 has more games due out in japan than the PS3 this year) and a motion sensitive controller and take the market by storm - even the Wii will collapse under the X360's renewed momentum. !

Well, the same could be said about the PS3 in Japan.  Compared to the Wii, the PS3 is dying in that country. 

It is not Microsoft giving up Japan
Japan gave up on Microsoft

they should give it up cause theyre not doing good there,only DQ could help them in japan

The Japanese games Microsoft is getting may not help in Japan much at this point but it further diversifies their library and it is helping in the west.

That's where your wrong , the PS3 hasn't had the same software support the 360 has yet it has stilled sold 4X more . MGs4 will increase the ps3 install base , Final Fantasy will increase the ps3 install base and then that's about it.

Sony aren't supporting the PS3 enough in japan but it would be stupid to deny that the PS3 has potential there.

Well, we all know that Level 5 will never ever cooperate with Microsoft again so that does not really suprise me much

Umm.... you still didn't compare the Wii to the PS3 in Japan.  You keep comparing it to the 360.  I guess the PS3 will get a consolation prize in Japan... 

Well, considering both Japan and US are heading/already in a recession, all companies should worry about Europe.