BSQUARE Creates Custom Windows XP Embedded Solution for University of Washington's Medical Centers.

Business Editors/High-Tech Writers

BELLEVUE, Wash.--(BUSINESS WIRE)--Dec. 18, 2003

Solves Critical Security and Remote Management Issues

with Thin Client Deployment

BSQUARE (Nasdaq:BSQR) today announced the completion of a major software engineering project for UW Medicine. BSQUARE adapted the Microsoft Windows XP Embedded operating system to meet the medical centers' unique network security, application, and remote management requirements, enabling the rollout of more than 800 thin client devices to replace UNIX-based terminals. The new devices will provide thousands of healthcare practitioners with secure browser-based access to critical patient care data.

BSQUARE's Professional Engineering Services (PES) group customized Windows XP Embedded to meet UW Medicine's requirements, which included advanced remote management, firewall protection for every device, and embedded third-party Java applications. Using Microsoft Target Designer and other Windows Embedded development tools, BSQUARE engineers wrote components for low-level systems integration with the thin client platform, ensuring fast performance and management of shared memory resources.

"UW Medicine purchased thin client devices, so major staff and financial resources were waiting for the new hardware to be installed before an application rollout could begin," said Carolyn Schott, project manager, UW Medicine. "We engaged with BSQUARE to solve several critical technical issues that were delaying the project deployment. Although they came into this project late, they ultimately became a very important factor in completing the implementation."

"The UW Medicine medical centers' implementation demonstrates that Windows XP Embedded is an ideal operating system for Windows-based terminals that run rich applications," said Scott Horn, senior director, Embedded Devices Group, Microsoft Corporation. "As Microsoft's Windows XP Embedded Systems Integrator of the Year, BSQUARE has the embedded technology know-how to transform a general-purpose Windows XP Embedded thin client into a device tailor-made for any customer's unique environment."

"Our engineers developed one-of-a-kind solutions to solve several of the challenges in this project," said Carey Butler, vice president of Professional Engineering Services, BSQUARE. "For example, to help minimize system downtime and the resulting disruption to ongoing medical care, we provided the university's IT managers with the ability to remotely update the Windows XP Embedded OS image and applications. We also provided Windows XP Embedded training to university personnel so they could learn how to integrate new applications and then clone and update the OS image themselves."

BSQUARE provides extensive professional services for OEMs and enterprises planning to deploy Windows XP Embedded devices. Services include Microsoft-certified Windows XP Embedded training; pre-packaged, project-oriented XPe JumpStart consulting services; and complete Systems Integration services, from integration of applications to customization of deployable Windows XP Embedded images. As an authorized Microsoft Windows distributor, BSQUARE also offers licenses for Windows XP Embedded.

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. All other product and company names herein may be trademarks of their respective owners.

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 the implementation of the UW Medicine project, our sales, customer prospects, profitability, financial goals, revenue targets, cash usage and projected financial results. 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.