increased by 409.7% to $45.9 million for fiscal 2005 compared to $9.0 million for fiscal 2004. The increase in handheld GPU sales in fiscal 2005 was primarily due to our acquisition of MediaQ, Inc. in the third quarter of fiscal 2004, which represented our initial entry into the handheld segment and to sales of our GoForce 4000 product.



Consumer Electronics Business. Consumer Electronics Business revenue decreased by 7.2% to $260.0 million for fiscal 2005 compared to $280.1 million for fiscal 2004. The decrease in our Consumer Electronics Business is due to unit sales volume increases offset by a lower average sales price. Sales of our Xbox products historically fluctuated based on the timing of orders from Microsoft.

Concentration of Revenue



Revenue from sales to customers outside of the United States and other Americas accounted for 84%, 76% and 75% of total revenue for fiscal 2006, 2005 and 2004, respectively. Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if the foreign CEMs’, add-in board and motherboard manufacturers’ revenue is attributable to end customers in a different location. The increase in the percentage of revenue from sales to customers outside of the United States and other Americas for fiscal 2006 as compared to fiscal 2005 and for fiscal 2005 as compared to fiscal 2004 is primarily due to decreased sales of XGPUs and MCPs used in the Microsoft Xbox product, which were billed to Microsoft in the United States.



Sales to our two largest customers accounted for approximately 26%, 31%, and 36% of our revenue during fiscal 2006, 2005 and 2004, respectively.



Gross Profit



Gross profit consists of total revenue, net of allowances, less cost of revenue. Cost of revenue consists primarily of the cost of semiconductors purchased from subcontractors, including wafer fabrication, assembly, testing and packaging, manufacturing support costs, including labor and overhead associated with such purchases, final test yield fallout, inventory provisions and shipping costs.  Cost of revenue also includes development costs for license and service arrangements. Gross margin is the percentage of gross profit to revenue. Our gross margin can vary in any period depending on the mix of types of products sold.  Our gross margin was 38.3%, 32.3% and 29.0% for fiscal 2006, 2005 and 2004. A discussion of our gross margin results for each of our operating segments is as follows:

 

Fiscal Year 2006 vs. Fiscal Year 2005



GPU Business. The gross margin of our GPU Business increased during fiscal 2006 as compared to fiscal 2005, primarily due to the sale of our GeForce 7 series GPUs and increased sales of our GeForce 6 series GPUs, which collectively now account for approximately 78% of our GPU Business revenue.  Our GeForce 7 and our GeForce 6 series GPUs generally have higher gross margins than our GeForce FX series GPUs which comprised 53% of our fiscal 2005 GPU Business revenue. In addition, average selling prices from our notebook GeForce 7 and GeForce 6 series GPU products increased as a larger percentage of our total notebook revenue during