From a white paper at MobiThinking

Augmented reality – an overlay technology for mobile devices. It’s being tested in Amsterdam. You look through your phone’s camera and see information about nearby stores or restaurants, ATM machines, etc. Very cool!

When I used to think about the future of mobile marketing, I envisioned a time when my phone would be spammed with promotional text messages IN ADDITION to emails. Augmented reality paints a much nicer picture. It’s pull, not push.

So what’s the worst thing that can happen?  When I use the app on my iPhone, I’ll see a screen jammed-packed with text or hear a bunch of audio messages all at one time? I can live with that.  It’s a much better prospect than hearing my phone constantly dinging as spam comes in.

From the L.A. Times

When Apple announced the addition of a compass to the iPhone 3GS, shortsighted onlookers responded with a yawn. Yay, we can find magnetic north.

But iPhone app developers quickly saw an opportunity, and a new breed of “augmented reality” apps are about to be born.

Holding the phone in front of you, locations are plotted on a live view of the world in relation to where you’re standing. The apps combine the phone’s key features — camera, GPS, compass and Internet connectivity — to create a sort of heads-up display reminiscent of first-person shooter video games.