The discovery that Apple's next iPhone might contain both video input as well as a magnetometer (digital compass) opens up some interesting possibilities for future iPhone applications.
Over at TouchArcade, game researcher Blair MacIntyre demonstrated an example of an Augmented Reality application that was in testing on the iPhone. Augmented Reality is described as a combination of real-world and computer-generated data, where computer graphics objects are blended into video footage in real time.
The example shown demonstrated the realtime overlaying graphics on top of video on the iPhone:
A more sophisticated example of a Zombie shooter was also shown using non-iPhone hardware. Due to a current lack of SDK video support, these apps would not be allowed in the App Store at this time, but both of these would be possible on the new iPhone if the rumors hold true.
The inclusion of a magnetometer (Digital Compass) will also introduce a number of new possibilities. Unlike accelerometers, a 3-axis magnetometer can determine absolute position. A Nokia blog post details what this could mean:
A traditional compass only works when it is held horizontally. As Paul Coulton recently described in his Forum Nokia Blogs posting, the Nokia 6210 includes a 3-axis magnetometer. Through some calculations, it is possible to find out the absolute direction in which the phone is facing, no matter how the phone is oriented.
Examples of how this could be used include pointing your iPhone's camera at a building and the phone telling you what building it is by combining GPS, accelerometer and compass information. The iPhone could even overlay graphics and text on top of the image to provide additional information. Another application described is the ability to show information about stars and constellations simply by pointing your iPhone towards the sky.
These sensors could also make this mockup/concept application a reality as well:
Such an application is not possible with the current iPhone's accelerometers alone.
