Server and Tools revenue increased reflecting growth in both product sales and Enterprise Services. Product revenue increased $253 million or 8%, driven primarily by growth in SQL Server, Windows Server, Enterprise CAL Suites, and System Center, reflecting continued adoption of Windows platform applications. Enterprise Services revenue grew $133 million or 17%, due to growth in both Premier product support and consulting services.
Server and Tools revenue for the three months ended September 30, 2011 included a favorable foreign currency impact of $108 million.
Server and Tools operating income increased due to revenue growth, offset in part by higher operating expenses. Cost of revenue increased $182 million or 24%, primarily reflecting a $154 million increase in expenses from providing Enterprise Services, which resulted mainly from increased headcount. Sales and marketing expenses increased $116 million or 13% reflecting increased corporate marketing activities.