Press Release

BSQUARE Distributes Products Through Arrow Development Tools Program; New Relationship Broadens North American Sales Channel for BSQUARE's Products

BELLEVUE, Wash.--(BUSINESS WIRE)--July 18, 2006--BSQUARE (Nasdaq: BSQR) has signed an agreement with Arrow Electronics, Inc. (NYSE: ARW) to distribute its hardware and software products through Arrow's Development Tool program, Arrowdevtools.com, a leading supplier of development tools and systems. Arrow will resell BSQUARE's new Microsoft(R) Windows(R) CE DevkitIDP 270 hardware development platform and SchemaBSP system software development tool that accelerate time-to-market for companies developing custom embedded devices using the Intel PXA270 Processor. This new channel will provide BSQUARE with revenue growth opportunities in North America.

Arrow recently selected BSQUARE to join its ACES Program in which Arrow will refer BSQUARE's engineering services to companies seeking development and testing expertise in Windows Embedded operating systems. ACES selected BSQUARE, an award-winning integrator of Microsoft's embedded products, for their expertise in innovative software solutions for customers such as Palm, Motorola, and Microsoft.

"Signing Arrow to distribute key products for us through their Arrow Development Tools Program and being named to the ACES Program are both indicators of positive business momentum for BSQUARE in North America", said Brian Crowley, president and CEO, BSQUARE.

"The new BSQUARE DevkitIDP products provide OEM design teams a wide variety of peripheral chips, expansion slots, a high-resolution display, and many other connectivity and storage options," said Ken Havens, Manager Technical Marketing Programs, Arrow North American Components. "Improving time-to-market, our customers' engineers can rapidly plan and validate designs while software engineers develop applications on a development platform that is close to the final production hardware."

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. Since 1994, BSQUARE has completed hundreds of successful projects and has become a trusted partner to smart device makers worldwide.

About Arrow North American Components

The North American Components (NAC) business of Arrow Electronics, Inc. is a leading provider of Semiconductors, Computer Products, and PEMCO (Passive, Electromechanical, and Connector) products, services, and supply chain solutions for thousands of design and manufacturing customers around the world. Four primary, customer-focused NAC groups serve these market segments: The Arrow/Zeus Electronics Group targets the Aerospace and Military markets; the Arrow Electronics Components Group serves local OEM and contract manufacturing customers; the Arrow Alliance Group focuses on large customers with complex needs; and the Arrow OEM Computing Solutions Group is focused on computing solutions for Industrial OEMs and Intellectual Property-based companies.

Arrow Electronics, Inc. is a major global provider of products, services, and solutions to industrial and commercial users of Electronic Components and Computer Products.

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


    CONTACT: BSQUARE
             Molly Allen, 425-519-5983
             pr@bsquare.com
             or
             Investor Contact:
             Hayden Communications, Inc.
             Matt Hayden, 858-704-5065
             matt@haydenir.com

    SOURCE: BSQUARE