What was user adoption like in year 1 of the XBox? I seem to remember that it really wasn't that hot, especially outside of the US (I remember it basically outright failing in Japan, but that's probably due to a combination of nationalism and a mismatch in the titles available to local tastes).

The XBox's 3-month figures were better than just about every other console on the market, including the PS2 & PS3[1]. Lifetime sales were lower, at about 24M, vs. the PS2's 155M. The 360 and PS3 are neck and neck overall, in the 70-80M range. And, as you said, both of the XBoxes failed in Japan, with 2M or fewer units sold.

[1] http://arstechnica.com/gaming/2013/02/wii-u-has-historically...

I think it did OK in the states. The real problem was that the PS2 ended up being so phenomenally successful that the XBox looked terrible in comparison. By the end of the console's lifecycle it was a respectable machine. It had good games and defined the online experience with XBL.

Not to mention taking an initial loss was standard industry practice in the console industry.

Every company I know of other than Microsoft who did that is either out of business or Sony. As far as I am aware, Nintendo has never taken a loss on hardware, or at least doesn't make a habit of it.

Nintendo has always been an exception, every other console maker did it. Even Nintendo changed their tune for a while, taking a loss after the 3DS price cut.