There is still no Digital Compass API for Windows Phone 7, but of course OEMs have access to the hardware at a much lower level, allowing the creation of apps like HTC Compass, a digital compass app recently released in Marketplace which not only generated Magnetic North directions, but using Bing Maps will also generate walking directions to nearby destinations.
This implementation is actually particularly useful as anyone who has ever tried to use Google Maps while walking will know â€“ knowing which direction to turn initially can be quite a challenge.
HTC Compass can be found in Marketplace here. It is not in the HTC Hub yet, so it is not clear if it can be installed on devices from other OEMs. If this is not possible the XAP can be found on XDA-Developers here. The app also comes pre-installed in the HTC Arrive.
Thanks Harold for the tip.