Dunno what people expected when Xbox launched, I personally feel it didn't do bad. It could have done a lot better, but competition was tough and the hype surrounding PS2 was almost mind-boggling. Sure, console freaks in general knew about Xbox and some expected a lot (while many others hated it because of MS), but the general public was mostly unaware of it and Xbox lacked any kind of brand recognition to build upon, whereas Nintendo has been synonymous with quality video-gaming for decades (at least until Playstation came along). Playstation also came almost out of nowhere, but IIRC PS didn't start dominating the sales charts until into its second year either and Sony picked the ideal time to come to market in comparison, with Nintendo still not ready (plus an arguably bad choice of not using CD media) and Sega performing horribly with its Saturn. MS on the other hand came to market at the same time as the veteran Nintendo, as if that wasn't enough there was an already strong ruling champion known as PS2, much different and tougher situation.
Considering this I think Xbox did reasonably well in the western markets, coming out of nowhere and basically performing on par with Nintendo on a western scale right away is an accomplishment IMHO. It'll be most interesting to follow this through and see how year two will go for MS and Nintendo. Right now Xbox certainly seems to catch on a bit, more people now know that the name has something to do with video-gaming, rumors about its supposedly better visuals are also heard outside of hardcore gamer circles, while sales this holiday season seem to be picking up even stronger than those of GC for most western territories (yeah I know, MS is "cheating" and "giving it away for free" blahblah, grow up). Not that I expect the Xbox to ever dominate sales charts, Playstation is a too strong brand and has too many top titles exclusively, but I definitely see room for growth in market share considering current events and the H1 03 games lineup (same goes for GC, I expect both to get closer to PS2 with time). IMHO although market share overall will probably change in some unpredictable ways, all 3 consoles are here to stay and that's a good thing!
As for Xbox in Japan, ahaem ... *cough* ... well they'll need a miracle (the kind of DQ, FF or Biohazard exclusive miracle, you know the kind that never happens), their current market share in the land of the rising sun is truly sobering (like below 2% for a while now in weekly sales, it'd be a bit higher if you exclude the handhelds and other consoles but its still extremely low)...
