support revenues that we recognized in fiscal 2012 and fiscal 2011 were affected by business combination accounting rules.

Excluding the effect of foreign currency rate fluctuations, total software license updates and product support expenses were flat in fiscal 2012 as an increase in intangible asset amortization and increased salaries expenses from increased headcount were offset by reductions in variable compensation expenses, bad debt expenses and certain other operating expenses.

Excluding the effect of currency rate fluctuations, total software license updates and product support margin and margin as a percentage of total revenues increased in fiscal 2012 as our total revenues increased while our total expenses remained flat.

Hardware Systems Business

Our hardware systems business consists of our hardware systems products segment and hardware systems support segment.

Hardware Systems Products:     Hardware systems products revenues are primarily generated from the sales of our computer server, storage and networking products, including sales of our Oracle Engineered Systems. We market and sell our hardware systems products through our direct sales force and indirect channels such as independent distributors and value added resellers. Operating expenses associated with our hardware systems products include the cost of hardware systems products, which consists of expenses for materials and labor used to produce these products by our internal manufacturing operations or by third party manufacturers, warranty expenses and the impact of periodic changes in inventory valuation, including the impact of inventory determined to be excess and obsolete. Operating expenses associated with our hardware systems products also include sales and marketing expenses, which are largely personnel related and include variable compensation earned by our sales force for the sales of our hardware products, and amortization of intangible assets.

Fiscal 2013 Compared to Fiscal 2012:     On a constant currency basis, hardware systems products revenues decreased in fiscal 2013 primarily due to reductions in the sales volumes of certain of our legacy product lines, including lower margin products. These revenue decreases were partially offset by increases in hardware revenues attributable to our Oracle Engineered Systems.

On a constant currency basis, total hardware systems products operating expenses declined in fiscal 2013 primarily due to a reduction in hardware systems products costs associated with lower hardware revenues, a decrease in employee related expenses due to decreased hardware systems sales headcount, and lower intangible asset amortization.

Excluding the effect of currency rate fluctuations, total hardware systems products margin and margin as a percentage of revenues decreased in fiscal 2013 as our total revenues for this segment decreased at a faster rate than our total expenses.

Fiscal 2012 Compared to Fiscal 2011:     Excluding the effect of currency rate fluctuations, hardware systems products revenues decreased in fiscal 2012 for similar reasons as those noted above for our fiscal 2013 revenues decrease.

Excluding the effect of