A far bigger factor, to me anyway, is how amazingly bad Xbox sales have been in Japan. Take a gander at this.
Japanese Console sales from March 18th to March 24th:
PlayStation 2: 85,370
Xbox: 5,005
GameCube: 34,448
Game Boy Advance: 40,345
PSOne: 7,658
Game Boy Color: 2,439
Wonderswan: 2,772
Not only is Xbox selling a fraction of what PS2 is, but it is selling at a lower rate then PS1! This means that MS isn't even getting a foothold in Japan. MS had to have known that it would lose to the PS2 in Japan over the short term, but these numbers say they are not even putting up a fight.
Still, things are early in the game and MS has the money to keep fighting long after other companies would have packed up and gone home. It also has a long history of turning things around after the first product was a failure.
Jay