It doesn't seem that long ago when I bought a new hard drive for my computer that had a capacity of 540 megabytes. Actually, now that I think about it, it was more than 10 years ago -- I must be getting older. I paid about $300 for that drive, and I thought I would never run out of room. Obviously things have changed. Apple (NASDAQ:AAPL) iPods have one-inch hard drives with far more capacity than the hard drive that I bought for my computer.

The huge gains in capacity that we have seen over the years have been possible because scientists and engineers have succeeded in reducing the space occupied by each individual bit on the disc surface. In a hard drive the data are stored magnetically. Each bit is like a tiny rectangular bar magnet that is lying horizontally on the disc surface. If the north pole is oriented one way the bit will represent a 1, and if the north pole is oriented opposite to that we have a 0. So to increase the capacity of hard drives the size of these bar magnets has been shrunk tremendously over the years and has allowed the storage capacities of hard drives to skyrocket while prices have fallen -- with the result that I am now willing to sell my old 540-megabyte drive for, oh, about $100. Send me an email if you are interested.

To continue providing ever larger hard drives Seagate (NYSE:STX) recently announced a new 160-gigabyte hard drive for laptop computers that incorporates a new technology called "perpendicular recording."

Perpendicular recording is important because the game of making the bar magnets smaller and smaller can go on only so long. The problem is that, to our little magnets, the surface of the disc is hardly a tranquil place. The bits receive a tremendous amount of jostling because of the thermal energy contained within the disc. If you have spent much time flying in a small four-passenger airplane you know that you can be tossed about violently by turbulence that someone in a jet liner would barely feel. Likewise, a small bar magnet is jostled much more than a larger magnet, which means that at some point, if the magnets are too small, their orientation can be flipped by the jostling. When that happens the data are scrambled, and you better have backed up that picture of your Aunt Madeline with pie on her face at your last family reunion.

Perpendicular recording allows a disc to hold more information without making the individual bits smaller. It is easy to visualize how this works by playing with dominoes. If you want to squeeze as many dominoes as possible, without stacking them, onto a cookie sheet you should stand them on end rather than lay them down. Likewise, in Seagate's new hard drive the individual bar magnets are standing up, whereas in earlier hard drives they were lying down.

The concept seems really simple, but of course there were technical hurdles to jump. Although this is the first hard drive to incorporate this technology, it is hardly a new idea. In addition to Seagate, expect Hitachi (NYSE:HIT), Maxtor (NYSE:MXO), Toshiba (OTC BB: TOSBF), and Western Digital (NYSE:WDC) to release hard drives that incorporate perpendicular recording in the future.

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Fool contributor Dan Bloom owns a new Apple computer but doesn't own Apple shares. He doesn't own shares in any of the other companies mentioned in this column either.