Netherlands-based Layar, a provider of augmented reality software, signed deals to be distributed on a third of smartphones worldwide and predicted a boost in the use of its technology, which combines real-world images with computer-generated images on a screen.

Layar expects tens of millions of users of its technology this year, the company told visitors to an event in one of Amsterdam's historic canalside houses on Friday celebrating its first anniversary.

We are on the brink of something big or maybe it is even big already, co-founder Maarten Lens-FitzGerald said.

The privately owned company said LG, the world's third mobile phone manufacturer, had signed a deal for worldwide distribution, while Samsung had expanded its relationship to its new mobile operating system Bada.

Layar added a Chinese handset manufacturer had also signed a global distribution deal for Layar software, along with TCT Mobile in Hong Kong.

We will announce more global distribution partnerships in the coming months with world leading manufacturers ... by early 2011 Layar expects to be distributed by the manufacturer on three out of four new smartphones shipped worldwide, said Matt Miesnieks, responsible for customer development at Layar.

In the past year over 2.2 million people used Layar products at least once, 700,000 in the past 30 days, the company said.

Augmented reality has been around for 15 years and broadcasters were early adopters, using digitized images to enhance TV pictures, commonly in coverage of sports events.

Video game makers, notably Sony Corp and Microsoft Corp, have also adopted augmented reality technology as a way to create more interactive games.

But the technology has garnered increased attention since its availability on smartphones, so someone holding up a mobile phone equipped with a camera, a global positioning satellite (GPS) sensor, compass and the right software can point to a city street and overlay other images and information.

Layar is one of the leading providers of the underlying software that makes possible augmented reality, which is available on Apple Inc's iPhone 3gs and Google Inc's Android-based mobile phones.

The company's main shareholders are Sunstone Capital of Denmark and Amsterdam-based Prime Technology Ventures.

(Reporting by Harro ten Wolde; Editing by David Holmes)

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