This is not my exact model (mine is a stainless band and a few other asthetic differences) but this is another in the Timex Expedition line of products which shows the compass.



The blue/red needle is the compass and although it appears to be analog it is in fact a digital compass. I also own another Timex (a Helix) with a built in digital compass and they are great. Although nothing beats a high quality traditional compass like a Silva Ranger CL or a Suunto MC-2G Navigator, I have tested these Timex digital watch compasses very throughly by using a high quality Silva Ranger as the benchmark and I am extremely pleased with them. No <20mm button compass I have seen even comes close, including the very nice little SAS button compass I bought from Tadgear for $33.