Revenue increased $1.6 billion or 8%, driven by growth in Productivity and Business Processes and Intelligent Cloud, offset in part by lower revenue from More Personal Computing. Productivity and Business Processes revenue increased, driven by the acquisition of LinkedIn and higher revenue from Office 365. Intelligent Cloud revenue increased, primarily due to higher revenue from server products and cloud services. More Personal Computing revenue decreased, mainly due to lower revenue from Devices, offset in part by higher revenue from Windows, Search advertising, and Gaming.
Operating income increased $311 million or 6%, primarily due to higher gross margin, offset in part by an increase in operating expenses. Operating income included an unfavorable foreign currency impact of 3%. Gross margin increased $1.2 billion or 10%, driven by higher revenue, offset in part by higher cost of revenue.
Key changes in expenses were:
• Cost of revenue increased $338 million or 4%, mainly due to growth in our commercial cloud and the acquisition of LinkedIn, offset in part by a reduction in phone sales.
• Sales and marketing expenses increased $473 million or 14%, primarily due to LinkedIn expenses and increased investments in sales capacity for our commercial cloud, offset in part by a reduction in phone expenses.
• Research and development expenses increased $375 million or 13%, primarily due to LinkedIn expenses and increased investments in cloud engineering, offset in part by a reduction in phone expenses.
• General and administrative expenses increased $62 million or 5%, primarily due to LinkedIn expenses.