as a result of a development contract.

 

Consumer Electronics Business. Consumer Electronics Business revenue was $170.2 million for fiscal 2006, compared to $260.0 million for fiscal 2005, which represents a decrease of 34.5%. The decrease in our Consumer Electronics Business is a result of decreased and discontinued sales of our Xbox-related products to Microsoft, partially offset by revenue recognized from our contractual arrangement with SCE. During the first quarter of fiscal 2006, Microsoft indicated that it would not order any more Xbox-related products from us after our second fiscal quarter. As a result, the second quarter of fiscal 2006 was the last quarter during which we recognized revenue from the sale of our Xbox-related products to Microsoft. During fiscal 2006, we recognized $49.0 million of revenue from our contractual arrangements with SCE to jointly develop a custom GPU incorporating our next-generation GeForce GPU and SCE’s system solutions in SCE’s PlayStation3. No such revenue was recognized during our fiscal 2005 as our definitive agreement with SCE was not executed until the first quarter of fiscal 2006.



Fiscal Year 2005 vs. Fiscal Year 2004



Revenue was $2.0 billion in fiscal 2005, compared to $1.8 billion in fiscal 2004, which represented an increase of 10.3%. Fiscal 2005 was a 53-week year, compared to fiscal 2004 which was a 52-week year.

 

GPU Business. GPU Business revenue increased by 7.1% to $1.4 billion for fiscal 2005 compared to $1.3 billion for fiscal 2004. The increase was primarily the result of increased sales of our NVIDIA Quadro professional workstation products in fiscal 2005, which was due to unit sales volume increases, and an increase in average selling prices as a result of increased board sales. Notebook GPU sales increased in fiscal 2005 as a result of sales of our GeForce FX Go notebook GPU products outpacing the decline in our older notebook GPU product lines during the period. Sales of desktop products increased in fiscal 2005 as a result of a significant increase in sales of our high-end desktop products, offset by a slight decrease in mainstream desktop products. High-end desktop sales increased in fiscal 2005 primarily due to unit volume increases primarily related to our GeForce 6800 and 6600 products. The decrease in mainstream desktop sales in fiscal 2005 was mainly due to competitive pricing in the mainstream segment offset by the ramp of product sales of our GeForce 6200 with TurboCache technology during the fourth quarter of fiscal 2005.



MCP Business. MCP Business revenue increased by 8.1% to $175.7 million for fiscal 2005 compared to $162.4 million for fiscal 2004. The increase in MCP Business revenue is due to increased sales of NVIDIA nForce3 and NVIDIA nForce4 products. NVIDIA nForce4 products began selling during the fourth quarter of fiscal 2005. This increase was offset by a decrease in sales of NVIDIA nForce2 products.



Handheld GPU Business. Handheld GPU Business revenue 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,