Last week, Sony was very happy to report that the PlayStation 3 is performing quite well in Australia. They were probably so excited because of how poor it is faring in other markets, including it's homeland in Japan. On the homefront, they compete directly with Nintendo, another Japanese native. They are losing to a noticeable degree.
The Wii is outselling the PS3 in Japan to a large margin, with the last month or so being the largest margin yet. With just around 271,000 units sold in a four week period for the Wii, it was six times more popular than the PS3 which sold just under 42,000 units. That's very noticeable, and is an even greater gap than was seen earlier in the year.
Why such a huge gap? Probably for many of the same reasons we see in the U.S. and other markets - cost difference and game selection. While Sony has promised to up game availability, it may not be enough to offset the high cost.
Sony is still faring much better than Microsoft. Japan shows no love for Redmond, with less than 18,000 Xbox 360s sold during that same four work period.