BSQUARE Delivers SDIO V2.X Technology for HP iPAQ Pocket PCs; Multi-Year Agreement to Leverage BSQUARE's Mobile Technologies.

BELLEVUE, Wash. -- BSQUARE (Nasdaq:BSQR), a leading provider of smart device solutions, announced today the integration of their Secure Digital Input/Output (SDIO) technology into HP iPAQ handhelds and their multi-year collaboration with HP. As a part of this relationship, BSQUARE will collaborate with HP to develop value-add technologies for HP mobile devices.

The HP iPAQ Pocket PC hx2200 and hx2700 series devices are currently shipping with SDIO Now! V2.1, BSQUARE's newest software stack. Customers can use Secure Digital (SD) technology to store music or video clips on removable cards or to extend device capability by adding peripherals such as GPS receivers or digital cameras. SDIO Now! V2.x enables mobile device customers to protect personal data, enjoy larger storage space, higher performance, and enhanced features when they use SD expansion capabilities on their devices.

SDIO Now! V2.1 features Fast Path technology, which boosts system throughput by up to 200%. SDIO Now! V2.1 also supports 2 GB MultiMediaCard (MMC) /SD memory cards and offers SD Password protection that allows HP iPAQ Pocket PC users to help safeguard their personal information and content on Secure Digital cards.

"BSQUARE continues to invest and maintain a leadership position in SD storage and SDIO expansion technology, a significant value-add to our customers," said Pawan Gupta, Vice-President of Products, BSQUARE. "We are pleased to announce our relationship with HP. We are delivering advanced SDIO features and capabilities to HP mobile devices, and our association has provided an opportunity for us to collaborate on mobile technologies for the future."

In a recent press release, market research firm Canalys (www.canalys.com) reports that HP vaulted into fifth place among worldwide providers of smart mobile devices based on unit shipments in the third quarter of 2005. HP shipped over 550,000 smart mobile devices in that quarter according to the release. Canalys also reports that global shipments of smart mobile devices are up 75% year-on-year in Q3 2005 with growth primarily occurring in the converged device category.

"We have enjoyed working with BSQUARE and value their industry expertise in removable storage software and solid teamwork ethic," said Jim Mann, Director of Engineering, Handheld Division, HP. "HP strives to deliver outstanding performance and functionality with each new generation of HP iPAQ handhelds."

About BSQUARE

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. 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.

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, strategic partnerships 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 may affect actual results include, but are not limited to, those discussed the section entitled "Factors That May Affect Future Results" in our Quarterly Report on Form 10-Q for the period ended June 30, 2005. 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.