Revenue increased, primarily due to the launch of Windows 8 and Surface on October 26, 2012, and strong sales of Server and Tools products and services, offset in part by lower Entertainment and Devices revenue. During the three months ended December 31, 2012, we recognized a net $622 million of revenue related to the Windows Deferral, and we deferred a net $788 million of revenue related to the Office Deferral and $380 million of revenue related to the Video Game Deferral.

Operating income decreased, reflecting higher operating expenses, offset in part by revenue growth. Key changes in operating expenses were:

• Sales and marketing expenses increased $547 million or 15%, primarily reflecting advertising of Windows 8 and Surface.

• Research and development expenses increased $157 million or 7%, due mainly to higher headcount-related expenses, primarily related to the Entertainment and Devices Division.