The Windows Phone 7 APIs will not include access to the compass at launch, as the next version of Windows Mobile struggles to find a direction.
Not that the hardware will lack a compass - its inclusion is one of the requirements to run Windows Phone 7 - but the product manager told Channel 9 (as reported by Mobility Digest) that there won't be a standard API for the compass at launch, so applications will have a hard time using it.
It's worth noting that the video has since disappeared. We've asked Microsoft if the API really will be missing, but the company hasn't got back to us yet.
All Windows Phone 7 devices are required to have a compass. That might have appeared unnecessary when it was announced in February, but since then it has become clear that a compass is essential for the augmented-reality applications that are just starting to become useful. If Windows Phone 7 can't run those applications it will miss out on what's clearly the coolest mobile technology of the moment, which won't go down well in Redmond.
Developers will still be able to use the compass in Windows Phone 7 devices, but they'll have to use device-specific APIs with no guarantee of cross-device compatibility – surely defeating the whole point of running Windows. The APIs are coming, apparently, and Microsoft would ask developers to migrate to the standards when they are available - assuming there are any developers left. ®