Strong enterprise demand offset by PC market slowdown
- PC market decline in anticipation of the launch of Windows 8
- Strength in multi-year licensing revenue, 15% growth
- Xbox continues its market share leadership in the U.S.
- OSD operating performance improvement
- Executing on product roadmap
- Operating expenses up 2%
Revenue decreased mainly due to the deferral of $1.2 billion of revenue related to the Windows Deferral and $189 million of revenue primarily related to the Office Deferral, as well as due to lower Xbox 360 entertainment platform revenue, offset in part by strong sales of Server and Tools products and services. Revenue for the three months ended September 30, 2012 also included revenue for Skype, which was acquired October 13, 2011.
Operating income decreased reflecting lower revenue and increased cost of revenue and research and development expenses. Cost of revenue increased $391 million or 10%, primarily due to payments made to Nokia related to joint strategic initiatives and higher headcount-related expenses, primarily related to the Server and Tools Business. Research and Development expenses increased $131 million or 6%, due mainly to higher headcount-related expenses, primarily related to the Entertainment and Devices Division, as well as increased lab and localization costs.