Now that high end “Smart Phones” are being released with all sorts of built-in doo-dads, like a camera, GPS unit and compass, it means that phones know exactly where they are and what you’re pointing them at. Which leads to some interesting applications:

It works as follows: Starting up the Layar application automatically activates the camera. The embedded GPS automatically knows the location of the phone and the compass determines in which direction the phone is facing. Each [commercial] partner provides a set of location coordinates with relevant information which forms a digital layer. By tapping the side of the screen the user easily switches between layers.

This is all kind of difficult to explain in words - check out the video of Wikitude in action to see what is going on…

In other words, your phone gives you a Terminator-style real-time Heads Up Display for whatever you’re looking at. Imagine the possibilities - cross it with Wikipedia/Wikitravel to give you the most amazing guide book ever. Cross it with an application that “calls” your phone and you’ve got the most immersive Alternate Reality Game ever. Heck, if it knows your demographic, then you’ve got some Minority Report-style personalized ads beamed directly from what you’re looking at. Which might sound annoying and intrustive, but when it’s this futuristic, who cares?