The big issue with OS development in Japan, is that there are no "real" OS' built in Japan, as a result you have to hire engineers with little to no OS development experience. Same goes for the people managing them.
There was a huge leap in what constituted OS' in consoles between PS2 and PS3, pre XBox console OS' were much closer to very simple RTOS' than what most would consider a fully functional OS.
If you want to hire experienced OS developers, you locate your development in the Bay Area or in the Greater Seattle area.
Indeed previous consoles OS's weren't much beyond dvd player firmware to get you where you wanted to go and provide an interface off of which to access the hardware for games. The last gen brought an explosion in resources for the OS and what they can do.