GPS gives you location. Accelerometers give you vertical orientation. However, without compass you have no *horizontal* orientation unless you are moving (e.g. in a car). Why is that big deal ? For two reasons. One, no directions (museum is left here, straight ahead is the palace, right is the park...), you just have a map which you need to figure out. Second, perhaps even more importantly, it is needed for augmented reality applications. Imagine pointing the device at a building and seeing the details about it. Or actually seeing the path you need to take like you had X-ray vision. Or automatic tagging of image contents. Or (personal favorite) pointing at the night sky and seeing constellations, celestial objects with details.