BSQUARE Announces Departure of Co-Founder William Baxter.

Business Editors/High-Tech Writers

BELLEVUE, Wash.--(BUSINESS WIRE)--Jan. 12, 2004

BSQUARE Corporation (Nasdaq:BSQR), announced today that company co-founder William T. Baxter has resigned as chief technology officer and director, effective January 21, 2004.

"Bill led both the company and Power Handheld business with great determination," said Brian Crowley, president & CEO of BSQUARE. "Now that the initial technology challenges of the Power Handheld have been met, and first deliveries to customers have taken place, Bill believes it is time to move on from BSQUARE. We are grateful for the many contributions he made to the company."

Baxter said, "I am thrilled about the growing customer adoption of Power Handheld and its future prospects. And I believe this is an appropriate time to turn the helm over to others on BSQUARE's executive team to provide the ongoing leadership the Power Handheld business requires."

Donald Bibeault, chairman of BSQUARE's board of directors said, "The significant operational changes that BSQUARE put in place during the past year have positioned the company to leverage its strengths and take advantage of opportunities in key markets. While Bill's role has been important, I believe this organization has the necessary talent -- with drive and discipline -- to build on BSQUARE's industry leadership and lead the company back to profitable growth."

Baxter concluded, "In looking back over the past ten years, I am proud of BSQUARE's pioneering achievements and the innovative products we delivered to the marketplace. As I leave behind the responsibilities of Power Handheld's management, I remain absolutely convinced of the company's future success as a shareholder. I am enthusiastic about its prospects and feel fortunate to have been an integral part of the BSQUARE team."

About BSQUARE

BSQUARE accelerates the development, deployment, and management of next-generation smart devices and applications. For nearly a decade, BSQUARE has provided more than 150 world-class manufacturers, integrators, and service providers with the building blocks necessary to design, develop, and test innovative products quickly and cost effectively. The company's suite of products and services includes Device Development Solutions, Wireless Solutions, and Custom Engineering Services. BSQUARE offers its customers deep expertise in the latest hardware and software, providing critical engineering services that have resulted in the successful launch of hundreds of new products and applications. For more information, visit BSQUARE at www.bsquare.com or call 888-820-4500.

BSQUARE is a registered trademark of BSQUARE Corporation.

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, profitability and financial goals. 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 and our ability to successfully support our operations, competition and intellectual property risks. In addition, demand for our Power Handheld based devices is uncertain and will be affected by a variety of business and economic conditions, including customer-ordering patterns. 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, 2002 in the section entitled "Risk Factors" 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.