Yes, the G1 screen orientation changes from portrait to landscape when you slide out the keyboard. However, the screen won't rotate automatically when turned to the side, even though an accelerometer is on board that makes this feature possible. Take a look at the YouTube video posted by nuuneoi to see that a hack is already in the works (and apparently working) to do just that - utilize the accelerometer to auto-rotate when the G1 is oriented in landscape.

This feature is claimed to be a part of the SDK and developers merely need to unlock this feature for their app. If that is the case, it begs the question why Google didn't give this unto us in the first place? Why must auto-rotation be a hack or third-party app rather than a feature applied universally to the G1?

[engadget mobile and nuuneoi]

 
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It's Unofficial: G1 Auto-Rotation Coming?

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The article is confusing. I don't believe auto-rotate is locked. Pictorial uses it. I think the issue is that auto-rotate is not handled at the OS level and each app has to do its own orientation work. The hack here apparently causes the OS to do its normal rotation as if the keyboard was opened based on the accelerometer instead of the keyboard. Besides people forget Android is open source. T-mobile could easily update the OS to do this if they wanted to. I'm sure future Android phoned will probably have this feature out of the box.