You're forgetting something. Xbox needs developers, developers don't need Xbox. PS2 games are currently selling the best in Japan, plus they have the largest audience to sell to. Most money to be made. Xbox is doing by far the worst in Japan, and it's Microsoft's job to sell the console, not the developers. If the Japanese don't like it (don't buy it), then they have no reason to develop for it.
Xbox is 1 year in, there are 4 years left. They're not better off pulling out now. You never know, there might be one game that just hits huge over there, and soon Xboxes are flying off the shelf.
They already put the Xbox out in Japan, they might as well leave it there. When Microsoft pulls out of Japan, it's a sign that the Xbox is done for.
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