EDD revenue increased primarily reflecting higher Xbox 360 platform revenue. Xbox 360 platform revenue grew $712 million or 69%, led by sales of Kinect sensors, increased volumes of Xbox 360 consoles, and higher Xbox LIVE revenues. We shipped 2.7 million Xbox 360 consoles and 2.4 million Kinect sensors (including those sold with consoles) during the third quarter of fiscal year 2011, compared with 1.5 million Xbox 360 consoles during the third quarter of fiscal year 2010. On April 21, 2011, we entered into definitive agreements to formalize an alliance with Nokia to enhance our Windows Phone opportunities and strategies for smartphones, productivity tools, mobile marketplace, and services.
EDD operating income increased primarily reflecting revenue growth, offset in part by higher cost of revenue. Cost of revenue increased $640 million or 104% primarily reflecting higher volumes of Xbox 360 consoles and Kinect sensors sold, and increased royalty costs resulting from increased Xbox LIVE digital content sold.