Whilst xenophobia is a convenient and often used excuse, it doesn't fully bear the weight of scrutiny. Apple products sell well - with huge rises in Japanese sales reported for 2008.
My own two cents:
Hardware failures are a sure fire turn off in Japan, which has a culture of producing high quality products. Japanese consumers place even more emphasis on this sort of issue than their western counterparts.
The machine itself is very bulky and loud, which is more of an issue in Japan where the average room sizes are extremely small compared with the US for instance.
Though the line up now is varied and vast, the machine has a reputation as the platform for FPS games, a genre which simply is not as popular in Japan as in the US.
The PSP is HUGE in Japan. The integration and feature set of PSP to PS3 connectivity and content is something no one else can offer.
The controller is large. They actually made smaller controllers for the Japanese market for the last xbox, but not this one.
Japanese consumers tend to keep their machines for quite a long time (witness the still huge sales for certain PS2 core titles). Given the way MS dropped support for xbox1, this will be a worry for many gamers in that market.
I actually think MS have given it a good go in Japan this generation, and there's no doubt that they have secured some titles for the region that have really lifted sales. But for all the above reasons, the machine is simply not as exciting a prospect in that market as the other HD alternative, and the sales simply reflect that.
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