Yes, it's certainly undertracked for Software.

All you need to do is look at PAL/Others software sales. The 360 debuted in 2005, but VGC only has the 360 selling ~3 million software units before Halo 3 debuted in 2007....Not very comprehensive, no?

I wonder if Microsoft are counting shipped numbers or sold to customers for this...

Its not... But if thats the case shouldn't these numbers be added to the software totals to bring the tie ratio/overall sales numbers inline if its impossible to do so with the actual software totals for individual games?

Probably sold, by nature of being an attach rate of software sold per console sold it has to be sold numbers or it would be something else.

excuse my stupidity but what about the downloadable titles? are they included?

^ Very unlikely

Microsoft are bound to have some inaccuracies themselves then. Also, as the case with the Live accounts, I imagine Microsoft would love to spice a number like that up a bit (Sony and Nintendo would do the same I imagine).

These come from financial reports, they have to be very careful with what they say and how accurate they are.

It is not really clear what they mean by the number, is that LTD or just for the quarter? Or is it a reference to NPD data which showed the same tie ratio for the end of March?

If it is lifetime shipments it actually indicates 360 software being overtracked, because 20 million unsold copies of software seems very low. (for comparison, Wii had a difference of 60 million between sold and shipped at the end of 2008)