Maybe because most of the world couldn't enter? Seriously Microsoft is an international company, don't see why they couldn't do an international competition. Especially when the contest page is in the "international language" English.
@fanbaby: Guys, why can't I deserve a fair chance?
I don't know why there were so few entries but when Channel9 did the summer of 9 contest they also got few entries. My biggest competitor was an application that was a text editor + Media Player + Browser + calculator. (Drag 'n Drop ALL the controls) Needless to say I won an Xbox with Halo 2.
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