BSQUARE to Provide Software Development Products and Services for New IBM Windows-based Terminal.

Business Editors/Technology Writers

BELLEVUE, Wash.--(BUSINESS WIRE)--Feb. 10, 2000

Selection based on breadth and depth of BSQUARE's product

and service offerings for the development of

Windows-based Terminal intelligent computing devices

BSQUARE Corporation (Nasdaq:BSQR) announced today that it was recently contracted by IBM to provide software solutions for the creation of IBM's newly announced Windows-based Terminal, scheduled to become available in the second quarter of this year.

Under the agreement, BSQUARE will provide a customized adaptation of the Windows-based Terminal Standard Edition 1.5 operating system using its CE Xpress(TM) Adaptation Kit and a host of software development services, the integration of third-party software, customized training, and documentation.

&uot;We look forward to assisting IBM with the development of such an innovative Windows-based Terminal,&uot; said Jeff McLeman, general manager of BSQUARE's thin client group. &uot;With our Windows-based Terminal Solution, our experience with Citrix ICA, and our ability to provide third-party software by publishers such as FutureSoft(R), we will provide the expert, full-featured software solution IBM needs for a fast, successful implementation.&uot;

&uot;When we decided to create the Windows-based Terminal, based on our Network Station Series 2200, we worked with BSQUARE to integrate not only WBT Standard Edition 1.5 and their own software solutions, but solutions from third-party software manufacturers as well,&uot; said Yvonne Perkins, Vice President of IBM Net Devices Development. &uot;BSQUARE provided us with a single source for our development software needs.&uot;

BSQUARE Provides a Custom Adaptation of Windows-based Terminal Standard Edition 1.5 and Other Software Products and Services for IBM

BSQUARE will provide a customized adaptation of WBT Standard Edition 1.5 through the licensing of the BSQUARE CE Xpress Adaptation Kit for the Network Station Series 2200 and custom software development services. In addition, BSQUARE will sublicense and integrate FutureSoft's DynaComm Connectivity Series(R) and Net Print Client for WBT Standard Edition 1.5, as well as integrate the Citrix ICA client application. All software will be tested using BSQUARE's CEValidator(TM) testing product as well as BSQUARE custom testing services. In the final phase, BSQUARE will provide IBM with documentation and custom training on the Windows-based Terminal, specific to the IBM Series 2200. The project is scheduled to be completed within the next few months.

According to research published by International Data Corporation, the overall thin client market for 1998 was 380,000 units and is expected to grow to slightly over 4 million units in 2002. In 1999, network computers represented 40.4% of worldwide shipments and Windows-based Terminals represented 58.8%. By 2002 the Windows-based Terminal portion of the thin client market will grow to over 3 million units and represent 74.1% of the total thin client market. One accelerating factor is the inclusion of Terminal Services, the server portion of a Windows-based Terminal, in the new Windows 2000. This built-in support will make it easier to deploy Windows-based Terminals across the enterprise.

About BSQUARE

BSQUARE Corporation (Nasdaq:BSQR) is a dynamic software company working with Fortune 500 companies to enable the age of intelligent computing devices. Specializing in Windows CE and Windows NT Embedded, BSQUARE is a supplier of software products and services for PC Companions, Internet appliances, industrial automation devices, Windows-based terminals, and other intelligent computing devices. BSQUARE's expertise in embedded Windows is derived from years of contributing to the development of the Windows CE operating system, from serving as a Microsoft preferred provider of Visual Tools for Windows CE, and from in-depth experience with Windows NT. BSQUARE is a Microsoft-sanctioned systems integrator and distributor.

For more information, visit BSQUARE at http://www.bsquare.com or call 888/820-4500.

BSQUARE is a registered trademark of BSQUARE Corporation. All names, product names, and tradenames are trademarks or registered trademarks of their respective holders.

This release contains forward-looking statements relating to our sales that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words &uot;believe,&uot; &uot;expect,&uot; &uot;intend,&uot; &uot;anticipate,&uot; variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect BSQUARE's actual results include adverse changes in BSQUARE's relationship with Microsoft, a decline in the market for Windows CE-based intelligent computing devices or the failure of such market to develop as anticipated, delays or announcements of delays by Microsoft of Windows CE product releases, factors that may affect BSQUARE's ability to complete work under contract, 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, in the section entitled &uot;Risk Factors.&uot; Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. BSQUARE undertakes 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.