BSQUARE Announces Availability of SDIO Now! Linux Product; First Customer Will Use BSQUARE Technology to Enable SDIO Wi-Fi Cards.

BELLEVUE, Wash. -- BSQUARE (NASDAQ: BSQR), a leading provider of smart device solutions, today announced the availability of SDIO Now! for Linux. SDIO Now! is a software stack that enables the use of MultiMediaCard (MMC) and Secure Digital (SD) memory cards for storing pictures, video, and data as well as the use of Secure Digital Input/Output (SDIO) peripheral devices such as digital cameras, GPS receivers, Wi-Fi cards, and RFID readers on mobile devices. This announcement is significant as BSQUARE has historically only provided its SDIO product for devices running Windows CE and Windows Mobile operating systems. E[acute accent]"We are pleased to announce that our first customer, a Taiwanese semiconductor manufacturer, will use SDIO Now! to enable SDIO Wi-Fi cards for Linux devices," said Brian Crowley, president and chief executive officer of BSQUARE. The expansion of our SDIO product line is an important part of our overall strategy to diversify our revenue stream with proprietary software products which will not only help to grow overall revenue but also expand gross margins. BSQUARE expects SDIO Now! for Linux to begin to contribute meaningfully to revenue and operating margins in mid-2006 after customers incorporate the product in their device designs. E[acute accent]"We believe that by offering SDIO Now! for Linux, BSQUARE is effectively doubling the potential addressable market for our SDIO stack, and we expect this product line addition to increase our SDIO Now! revenue accordingly," said Pawan Gupta, Vice-President of Products, BSQUARE. "Twice as many device users will now potentially benefit from our technology, one that has been successfully field tested for more than two years in Windows Mobile devices." E[acute accent]BSQUARE's SDIO platform enables customers to offer high performance expansion solutions, to stay current with the ever-changing requirements of higher density memory cards, and to provide advanced security capabilities for mobile devices. SDIO Now! also eliminates the need for engineers to develop individual drivers for each device thereby reducing time to market and development costs. E[acute accent]"We believe that the prospects for our SDIO product line have increased significantly given this announcement and the collective forecast for growth in the converged device marketplace," Crowley continued. E[acute accent]According to IDC, a leading provider of global IT research and advice, Microsoft Windows Mobile and Linux were used in 13% and 11%, respectively, of the 22 million converged mobile devices shipped in 2004. Converged devices, or smartphones, typically support secure digital storage cards and secure digital I/O functionality. IDC forecasts that Microsoft Windows Mobile and Linux will be used in 34% the projected 167 million converged devices forecasted to ship in 2009.

E[acute accent]About BSQUARE

E[acute accent]BSQUARE is a solution provider to the global embedded device community. Committed to delivering quality, lowering project risk and time to market, our teams collaborate with smart device makers at any stage in their device development. Our solution portfolio includes software and hardware development, systems integration services, reference designs, board support packages, middleware, and applications. As a full service provider, device makers can also license best-in-class software products and operating systems. Since 1994, BSQUARE has completed hundreds of successful projects and has become a trusted partner to smart device makers worldwide.

E[acute accent]BSQUARE is a registered trademark of BSQUARE Corporation. Other product or service names mentioned herein are the trademarks of their respective owners.

E[acute accent]This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to our projected financial results and proprietary products strategy. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Our forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict and could cause actual results to differ materially from those projected. Factors that could affect our actual results include a decline in the market for our products, technology licenses and services; a decline in the market for Windows-based or other smart devices or the failure of this market to develop as anticipated; adverse changes in macro-economic conditions; our ability to successfully implement, execute and make adjustments in our business strategy, business model or product offerings to meet the needs of our current, new and potential customers; risks associated with the effects of our restructurings; our ability to successfully support our operations; competition; and intellectual property risks. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in BSQUARE's Annual Report on Form 10-K for the year ended December 31, 2004 in the section entitled "Business--Factors That Could Affect Future Results" and in our subsequent Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.