Table:
|  |  |  | Year Ended May 31, |  |
| --- | --- | --- | --- | --- |
|  |  |  | Percent Change |  |
| (Dollars in millions) | 2019 | Actual | Constant | 2018 |
| Hardware Revenues: |  |  |  |  |
| Americas | $1,889 | -6% | -4% | $2,003 |
| EMEA | 1,082 | -10% | -5% | 1,201 |
| Asia Pacific | 733 | -7% | -4% | 790 |
| Total revenues | 3,704 | -7% | -5% | 3,994 |
| Expenses: |  |  |  |  |
| Hardware products and support (1) | 1,327 | -14% | -11% | 1,547 |
| Sales and marketing (1) | 520 | -19% | -16% | 643 |
| Total expenses (1) | 1,847 | -16% | -13% | 2,190 |
| Total Margin | $1,857 | 3% | 6% | $1,804 |
| Total Margin % | 50% |  |  | 45% |
| % Revenues by Geography: |  |  |  |  |
| Americas | 51% |  |  | 50% |
| EMEA | 29% |  |  | 30% |
| Asia Pacific | 20% |  |  | 20% |
Paragraphs:
Hardware Business
Our hardware business’ revenues are generated from the sales of our Oracle Engineered Systems, server, storage, and industry-specific hardware products. Each hardware product and its related software, such as an operating system or firmware, are highly interdependent and interrelated and are accounted for as a combined performance obligation. The revenues for this combined performance obligation are generally recognized at the point in time that the hardware product and its related software are delivered to the customer and ownership is transferred to the customer. Our hardware business also earns revenues from the sale of hardware support contracts purchased and renewed by our customers at their option and are generally recognized as revenues ratably as the hardware support services are delivered over the contractual term, which is generally one year. The majority of our hardware products are sold through indirect channels such as independent distributors and value-added resellers, and we also market and sell our hardware products through our direct sales force. Operating expenses associated with our hardware business include the cost of hardware 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; the cost of materials used to repair customer products; the cost of labor and infrastructure to provide support services; and sales and marketing expenses, which are largely personnel related and include variable compensation earned by our sales force for the sales of our hardware offerings.
1 ) Excludes stock-based compensation and certain expense allocations. Also excludes amortization of intangible assets and certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segments and Other Financial Information” above.
Excluding the effects of currency rate fluctuations, total hardware revenues decreased in fiscal 2019 relative to fiscal 2018 due to lower hardware products revenues and, to a lesser extent, lower hardware support revenues. The decrease in hardware products revenues in fiscal 2019 relative to fiscal 2018 was primarily attributable to our continued emphasis on the marketing and sale of our cloud-based infrastructure technologies, which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of hardware support contracts sold in recent periods. This constant currency hardware revenue decrease was partially offset by certain hardware revenue increases related to our Oracle Engineered Systems offerings, primarily Oracle Exadata.
Excluding the effects of currency rate fluctuations, total hardware expenses decreased in fiscal 2019 compared to fiscal 2018 primarily due to lower hardware products and support costs and lower sales and marketing employee related expenses, all of which aligned to lower hardware revenues.
In constant currency, total margin and total margin as a percentage of revenues for our hardware segment increased in fiscal 2019 due to lower expenses.
Question:
Why did the total hardware expense decrease in fiscal 2019 compared to fiscal 2018?
Answer: Excluding the effects of currency rate fluctuations, total hardware expenses decreased in fiscal 2019 compared to fiscal 2018 primarily due to lower hardware products and support costs and lower sales and marketing employee related expenses, all of which aligned to lower hardware revenues.