BSQUARE acquires TestQuest

What Happened?

Yesterday, BSQUARE announced the acquisition of automated test tool vendor TestQuest. BSQUARE noted that the acquisition was in line with a strategy of growing its product business to support existing customers. The acquistion will also provide added exposure to BSQUARE across various geographic regions (especially within the Asia Pacific region), access to new customers outside of the embedded system market, and strengthen their offerings for companies using multiple types of operating systems including Symbian, Linux, and others in addition to Windows Mobile.

BSQUARE reported that they had purchased the company for $2.2 million in cash and that TestQuest had generated approximately $4.8 million over a 12 month period ending September 30th 2008.

VDC’s View

While BSQUARE is likely to continue to focus significant efforts around its core Windows licensing and engineering services businesses within the embedded market, this acquisition is part of a larger effort to broaden its portfolio of complementary software product offferings. The company has released a number of new products over the last year or so, including products for UI development for flash, a 3G wireless development kit, and the Device Validation TestSuite, a QA testing tool for Windows CE on the TI OMAP3 Evaluation Module.

The acquisition should help BSQUARE to build on its capabilities around QA and test for mobile, especially devices using non-Windows-based operating systems prevalent within the mobile phone market such as Linux and Symbian. For a company with a solid footing in the Windows universe, additional products catering to the needs of other operating system platforms is a good strategy as well.

The move also speaks to the growing importance of test and verification within the mobile phone market given the continued growth in software content per phone (recent VDC findings suggest that the code base within the mobile phone market may be growing at a rate of approximately 14% per year) and compressed development cycles.