In this article smart appliances are characterized as devices that are atte
ntive to their environment. We introduce a terminology for situation, senso
r data, context, and context-aware applications because it is important to
gain a thorough understanding of these concepts to successfully build such
artifacts. In the article the relation between a real-world situation and t
he data read by sensors is discussed; furthermore, an analysis of available
sensing technology is given. Then we introduce an architecture that suppor
ts the transformation from sensor data to cues then to contexts as a founda
tion to make context-aware applications. The article suggests a method to b
uild context-aware devices; the method starts from situation analysis, offe
rs a structured way for selection of sensors, and finally suggests steps to
determine recognition and abstraction methods. In the final part of the ar
ticle the question of how this influences the applications is raised and th
e areas of user interfaces, communication, and proactive application schedu
ling are identified. We conclude with the description of a case study where
a mobile phone was made aware of its environment using different sensors.
The profile settings of the phone (ringing mode etc.) are automatically sel
ected according to the real world situation the phone is used in.