A new mobile app called Layar has been launched recently. It will initially only be available for Android, with the intent of getting it onto the iPhone 3G S as a priority. At this point it only functions in the Netherlands, but will be available in Germany, UK and US this year. The video below shows how it could work, giving an example of identifying vacant real estate simply by scanning around.
One of the phone features required for this app to run is the magnetometer (compass). This has been available on many Nokia and some other handsets for a while, and makes its iPhone debut with the 3G S. Magnetometers are actually very inexpensive, but allow a wealth of new mobile applications that depend on knowing which way the camera is oriented.
There is no question that augmented reality will be a key feature of our technological future, and clearly this will be primarily relevant when we are mobile. Annotation of our environment, including detailed information about its features, and particularly user-generated content, will be extremely useful as well as fun. The pervasive nature of the iPhone means this is the platform which is likely to popularize mobile augmented reality. Layar is a player and no doubt there will be more.