Update 2: According to iTWire, Microsoft has denied the Smarthouse article, which claimed that the Xbox 360 was "dead" in Australia. Mariana Cidade, PR Manager of the entertainment and devices division for Microsoft Australia, noted that over 2 million pieces of Xbox 360 software have been sold in Australia and New Zealand, which is "nearly double [the Xbox 360's] next-gen competitors combined." Also noted was the Xbox 360's attach rate of 7 games per console in Australia, hardly the kind of sales garnered by a dead console. The data comes from GFK, a market research firm, and puts something of a damper on Smarthouse's already dubious (and anonymous) claims. Find our original post after the break.

Update: Added a link to the original Smarthouse article.

According to a recent news channel survey of 10 different Australian video games retailers (with over 2000 stores spread across the continent): "The Xbox 360 is dead. We are stocking it because of our relationship with Microsoft ..." If that's not a big statement to you, just wait, we've got more. The same retailer claims that the other two consoles are succeeding due to the appeal to children/women, and Blu-ray, respectively. They think the 360 brand can't really be redeemed after the RROD, and that the value proposition offered by Microsoft did not seem equal in comparison to the competition.

Furthermore, the Australian retailers are considering dropping the console from stores entirely: "We are stocking it because of our relationship with Microsoft, however all our energy and marketing is going into the PS3 and the Nintendo Wii unless Microsoft come up with something new or additional marketing dollars,." "Halo 3 was big on the Xbox but that was about it." "They have tried discounting and value add offers and even that is not working. We are even thinking of dumping the console all together."

This article was originally published on Joystiq.