BSQUARE on Track in Licensing Microsoft Windows Embedded to OEMs

9/22/2004 - BSQUARE (Nasdaq: BSQR), a leading provider of smart device solutions, announced it has surpassed 1,000 Microsoft Windows operating system customers. The company also announced the renewal of its annual Original Equipment Manufacturer (OEM) Distribution agreement that allows BSQUARE to provide Microsoft Windows Embedded operating systems to OEMs of dedicated purpose computing devices. In addition to BSQUARE’s current distribution territory covering the United States and Canada, Microsoft has extended the agreement to include the emerging Mexico market.

The licensing of Microsoft embedded toolkits and operating systems has contributed substantial revenue for BSQUARE since the company’s acquisition of personnel from Annasoft, a leading Microsoft distributor, in the second quarter of 2002. BSQUARE’s licensing revenue grew from $1.7 million in 2001 to $24.6 million in 2003. “The growth of our Microsoft licensing business is important to BSQUARE as it provides a steady flow of leads and the opportunity to sell additional value-added products and services to an expanding customer base,” said Brian Crowley, president and CEO of BSQUARE.

BSQUARE has experienced significant growth in the licensing of Microsoft’s embedded operating systems: Windows CE and Windows XP Embedded. BSQUARE expects this trend to continue as current customers migrate their smart devices from Microsoft Windows Classic operating systems, such as Windows 98, to Windows Embedded operating systems. In addition, BSQUARE’s quarter-over-quarter growth in sales of development toolkits for these operating systems to new customers is a positive indicator of future licensing sales and service opportunities. Sales of the new Windows CE 5.0 toolkits this quarter are strong and BSQUARE expects a significant pick up in Windows XP Embedded toolkit sales upon the upcoming availability of Windows XP Embedded Service Pack 2.

In the worldwide embedded operating system market, Microsoft operating system and toolkit revenue accounted for a 26% market share, according to Venture Development Corporation’s independent research published in mid-2004. BSQUARE has assisted OEMs in evaluating appropriate operating systems for their device projects and recently convinced MF Digital, an industry leading manufacturer of CD/DVD duplication devices, to standardize on Windows XP Embedded instead of Linux.

BSQUARE is a leading global provider of software, engineering services and consulting for the smart device market. Since 1994, BSQUARE has provided world-class device makers with the building blocks necessary to design, develop, and test innovative products quickly and cost effectively. A sample of BSQUARE customers includes Motorola, Hewlett-Packard, Texas Instruments, NEC, HTC, Microsoft and others. BSQUARE is one of Microsoft’s largest value-added partners worldwide for Windows Embedded software, a Gold-level Systems Integrator of the year and a leading Windows Mobile solutions provider for Smartphone and Pocket PC. BSQUARE is a Texas Instruments-licensed Independent OMAPTM (Open Multimedia Application Platform) Technology Center. The company’s SDIO Now! technology has been adopted by over 65 top-tier smart device makers. For more information, visit BSQUARE at or call 888-820-4500.

BSQUARE is a registered trademark of BSQUARE Corporation.

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