That's the division that houses Microsoft's Xbox, which has been lauded for finally turning the corner and earning a profit.
We asked Bill Koefoed, who is head of IR, why Microsoft lost money in E&D.
It's not because of Xbox, it's because of Windows Phone. He said payments to Nokia were to blame for the loss. Microsoft has something called platform payments, which it agreed to pay when it struck a partnership with Nokia.
However, Koefoed was quick to add that Windows Phone was up 50% on a sequential basis. Yes, it's working from a small base, but it's still encouraging.