If you look at the segments report[1] you'll find that the real drivers of the increase was Devices and Consumer Hardware, which was mostly driven by the Xbox l

If you look at the segments report[1] you'll find that the real drivers of the increase was Devices and Consumer Hardware, which was mostly driven by the Xbox launch, and Commercial Licensing. But the Gross Margin tells a different story. When you subtract the cost of making the Xbox consoles the D&C Hardware segment actually decreased from last year. The only real increase is Commercial Licensing, which is mainly Office and servers. [1] http://www.microsoft.com/Investor/EarningsAndFinancials/Financials/fy14/q2/SegmentRevenues.aspx http://www.microsoft.com/Investor/EarningsAndFinancials/Fina...