BSQUARE Corporation (Nasdaq:BSQR) and Mitsubishi Electric Corporation (Mitsubishi)(FTSE: 6503q.1) both announced today that they have signed a multi-year contract in which BSQUARE will develop Microsoft's Windows CE operating system support for Mitsubishi Electric Corporation's microprocessor, the M32R/CE(a).

Mitsubishi will use Windows CE in conjunction with the M32R/CE for a Home Network system and a car navigation system Car-Infotainment Device.

"Windows CE is revolutionizing the market for home network systems, car navigation and other information appliances," said Takashi Furumura, Project Manager, Home Network LSI Development Project of Mitsubishi, responsible for Windows CE and M32R. "By providing rich user interface elements and a complete network platform, Windows CE provides a framework for the next generation car information systems and completely new consumer Internet services. As a leading semiconductor manufacturer, home network designer and car navigation systems designer, Mitsubishi is committed to staying on the leading edge of innovation in these markets. We look forward to working with the experts at BSQUARE to help us adapt Windows CE to our high performance M32R/CE architecture to provide the platform for these new innovations."

"Time to market was absolutely critical," said Masahiro Noguchi, Manager, Internet Device Architecture Team at Mitsubishi. "We were also concerned with quality, for these car navigation systems will carry the well respected brand of Mitsubishi, the leader in car navigation systems. The units will be in Mitsubishi Motors automobiles as well as other luxury vehicles. There was only one choice as far as we were concerned in partnering on Windows CE. That partner was BSQUARE."

"We are honored that Mitsubishi has selected BSQUARE for such a significant development project," said Don Whitt, General Manager of BSQUARE Corporation. "We are confident that BSQUARE can provide differentiation and accelerate time to market for Mitsubishi's Home Network system and car navigation device. We are also pleased that this is a long-term contract for BSQUARE and we expect this to be just the beginning of the business relationship between Mitsubishi and BSQUARE."

"We are pleased that Mitsubishi and BSQUARE are working to bring these new systems to market based on the Windows CE 3.0 platform," noted Scott Horn, group program manager, Embedded and Appliance Platforms Group at Microsoft Corp. "Home networking and car navigation systems represent an opportunity for large numbers of consumer devices that can support a rich set of new Internet applications and services."

Under terms of the agreement BSQUARE will develop a version of the Windows CE 3.0 for the M32R/CE which will include tools and operating system support. Microsoft Platform Builder, Visual C++, and compiler support will be among the development. The project has already been commenced by BSQUARE, which has been closely working with Mitsubishi.

About BSQUARE

BSQUARE (Nasdaq:BSQR) is innovating tomorrow's devices through software solutions for the development of intelligent computing devices. Specializing in the Microsoft Windows family of operating systems, BSQUARE supplies software products and services for the development and use of PC Companions, Internet appliances, industrial automation devices, Windows-based terminals, and other mobile and wireless intelligent devices. From development tools to software infrastructures to end-user applications, the BSQUARE touch is on many embedded Windows-based devices available in the market today.

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

About Mitsubishi Electric Corporation

Mitsubishi Electric Corporation (FTSE: 6503q.1) has more than 75 years experience in providing reliable, high quality products to both corporate clients and general consumers all over the world. A recognized leader in the manufacture, marketing, and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and construction. With operations in 34 countries, Mitsubishi Electric Corporation recorded consolidated group sales of over US$31 billion in the year ending March 31, 1999. Additional information on Mitsubishi Electric Corporation is available at www.mitsubishielectric.com.

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

(a) M32R/CE is a tentative product name.
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 "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. 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, the failure of BSQUARE to attract microprocessor vendors and to secure contracts on sufficiently profitable terms, 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 "Risk Factors." 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.