To be fair about Japan......
Microsoft is doing fairly well, despite the horrid list of games that it has, and sales have been unique to say the least.
Microsoft has around 400,000-420,000 hardware units available in Japan, that consumers can purchase games on (obviously). At this point, when the Xbox was at 400,000, absolutely no games sold. The last created game for the Xbox that was big, Ninja Gaiden in 2004 I believe, only sold 66,000 - again with 400k hardware units sold.
Fast forward to now, MS has the same ammount of units. The difference is, games are selling far better than the Xbox's countepart. What does this mean? In 2004, most Xbox owners could of cared less about their Xbox, and had moved on to Playstation 2's.
In 2007, however, games like Oblivion and Trusty Bell have done rather well, both selling over 70k with the same # of systems - and I'd argue that a NInja Gaiden at this point would sell well over NG's 66k in Japan.
And again, Oblivion, Blue Dragon, and Viva Pinata continue to do insanely well on the X360 format. Oblivion totally came out of nowhere, when everyone thought it'd do 20k LTD, and wound up selling 20k in under a day, and has had the 2nd best legs of any X360 game out there.
Likewise, Viva Pinata has had a 13x multiplier - something no X360 game has had. Despite the horrible 20k sales, it got there with a 1,599 first-week cume. Pretty good, eh? Blue Dragon also has a great multiplier for a very frontloaded RPG. If Blue Dragon 2 came out on X360 in 2009, it would probably wind up hitting 500k by then.
So all numbers must be compared, analyized and rated vs. comparibles. The issue is that there are very few comparibles with the Xbox and X360, since both are so poorly recieved in Japan. However, atleast the X360's sales are INCREASING year over year versus decreasing, like many failures have (Xbox, Dreamcast, Gamecube).