There's been a lot of talk lately regarding Sony's November NPD results, in which they lost to the Xbox 360 by a small margin compared to last year. It's important to note that the PS3 sold significantly more than last year, where the PlayStation 3 sold only 378,000 units. On the other hand, Microsoft experienced a small decline year over year selling 20,000 units less than last year. So it's safe to say that Sony are still strong competition for Microsoft in North America.
The same cannot be said for Xbox in Japan. I've seen quite a few articles regarding the Xbox 360 in Japan, most of them arguing that Microsoft should give up in Japan. To get the full extent of how bad the Xbox 360 is doing in Japan, you need to see some numbers.
The Xbox 360 launched in Japan on December 10 2005, a whole year before the PlayStation 3 launched in Japan. Since that time, the console has managed to sell just over 1 million units. The PlayStation 3, which came out a year later, has sold just over 4 million units to date in Japan alone. Yet even more embarassing for Microsoft, is that the Xbox 360 was even outsold by the PlayStation 2 from December 2005, with the PS2 selling over 3 million units in the same period (please be aware that VGC uses Media Create numbers for their Japanese statistics).
So Microsoft have been outsold by a more expensive and less supported next generation console, and by an old, cheaper, last generation console as well, but should they really give up on Japan?
Microsoft has been doing everything right in Japan, they have had exclusivity or timed exclusivity on several Japanese RPGs, a tactic you would expect to work. It seems though, that it hasn't worked as the highest selling Xbox 360 exclusive in Japan, has been outsold by several PS3 exclusives. And now, developers have stopped supporting the Xbox 360 in Japan, for example Quantum Theory is only being published on the Xbox 360 outside of Japan.
To a certain extent though, it has worked, as the Xbox 360 has sold significantly more than the Xbox 1 in Japan. The original Xbox barely managed to sell half a million units throughout its lifetime, so the Xbox 360 has managed to more than double that install base. I'd estimate that the Xbox 360 will sell about 2 million units throughout its lifetime in Japan, which means there would 2 million Xbox fans that would be willing to buy an Xbox 720 when the next generation comes around.
Therefore Microsoft should not give up in Japan, because they may not win this time, or even next generation, but if they keep doing what they are doing, eventually they will become a serious competitor for Sony and Nintendo in Japan. Although in this generation Microsoft are the losers in Japan, and it doesn't look like their fortunes will be improving next week when Final Fantasy XIII launches exclusively on the PlayStation 3 in Japan.