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matt247 said:

Finally, the EDD division found savings by reducing research and development expenses during the nine month period by 6 percent, or $82 million. The cutback is curious, given that Microsoft spent the period hard at work developing its motion-sensing system Project Natal, which it plans on launching this holiday season with as much hype as it would console.

Its easy to see why R&D costs are reducing.  Natal, Windows Phone 7, and Kin Phones are all moving into a production phase.  R&D costs are reducing as they just iron out the wrinkles.



Its libraries that sell systems not a single game.