Server and Tools revenue increased reflecting growth in product revenue and Enterprise Services revenue. Product revenue increased $343 million or 12%, driven primarily by growth in Windows Server, SQL Server, Enterprise CAL Suites and Windows Embedded revenue, reflecting continued adoption of Windows platform applications. Enterprise Services revenue grew $66 million or 9%, due to growth in both Premier product support services and consulting services.
Server and Tools operating income increased primarily due to revenue growth, offset in part by a slight increase in operating expenses. Cost of revenue increased $55 million or 8%, reflecting higher costs associated with the delivery of services and online costs. Sales and marketing expenses decreased $38 million or 4%, primarily due to lower corporate marketing and advertising expenses.