BSQUARE Announces Portable Media Player Product Initiative; Market-Leading Asian OEM Signs Deal Worth Over $1 Million in Revenue.

BELLEVUE, Wash. -- BSQUARE (Nasdaq:BSQR) today announced the launch of its portable media player (PMP) product initiative and the signing of its first customer, a market-leading Asian OEM, in a deal worth over $1 million. The PMP product is a Microsoft(R) Windows(R) CE 5.0 digital media-management and player software solution that enables OEMs to quickly enter the growing market for PMP players, a new product category that enables consumers to enjoy movies and video clips, view family photos, and listen to music on a single mobile device. According to In-Stat (www.instat.com), annual shipments of PMP players will enjoy greater than 56% compound annual growth between 2005 and 2009, representing millions of unit shipments and a growing market opportunity for BSQUARE.

"Our PMP media-management and player solution is a logical extension of our Reference Design initiative whereby BSQUARE provides pre-engineered hardware and software solutions that our customers can adapt, customize and rapidly take to market," said Pawan Gupta, Vice President of Products, BSQUARE. "We expect to announce several other customers for our PMP software in the coming months. We also anticipate that OEMs developing set-top boxes and converged mobile devices will be interested in our PMP technology to play and manage multimedia content."

BSQUARE is collaborating with Advanced Micro Devices (NYSE:AMD) to offer a turnkey PMP reference design. BSQUARE will integrate its PMP software with the AMD Alchemy(TM) DBAu1200(TM) development board and customize the user interface and features for each customer. This approach enables OEMs to quickly bring portable media players to market.

"BSQUARE and AMD are working together to deliver a well-rounded solution that incorporates low-power, full function and versatile software applications to provide top-quality mobile entertainment," said Erik Salo, marketing director, Microprocessor Solutions Sector, AMD. "With the AMD Alchemy Au1200 processor, consumers can quickly and easily download media and enjoy DVD-quality video on the go. Also, OEMS are able to swiftly create full-featured, innovative PMPs with minimal risk, reduced time to market and costs."

Interested OEMs can preview BSQUARE's PMP platform now. The media-management and player solution running on the AMD Alchemy(TM) DBAu1200(TM) development board is targeted to be fully available in the first quarter of 2006.

About BSQUARE

BSQUARE is a software 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. For more information about BSQUARE, visit its website at www.bsquare.com.

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

AMD, the AMD Arrow logo, AMD Alchemy, and combinations thereof, and Au1200 and DBAu1200 are trademarks of Advanced Micro Devices, Inc.

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 product initiatives, collaborative partnerships, project timelines, business development and proprietary products strategy. The words "believe," "expect," "intend," "anticipate," "presume," 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 Quarterly Report on Form 10-Q for the period ended September 30, 2005 in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors That May Affect Future Results." 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.