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Toshiba 0.85 Inch Diameter Hard Drive
Toshiba has developed a "nickel disk", a hard drive that is only 0.85 inches in diameter. The new form factor will be used for storage in portable devices like cell phones. It is estimated that they will store up to 4 gigabytes of information.
Update: Guiness World Records announced on March 16th that the Toshiba Drive is the smallest in the world. The 0.85-inch HDDs will start mass production at the end of the year. (Thanks to CNN - Guiness Record for the world's smallest hard disk drive via Slashdot for the tip.)

Photo from Zdnet Japan; reference story here.
The current record-holder is a one-inch diameter hard disk made by Hitachi; but save your old one-inch disks, the nickel disks won't be ready for mass production until 2005.
Science fiction fans may recall the dime disk mentioned in Larry Niven's 1998 story Madness Has Its Place. The new Toshiba 0.85 inch hard drive is not quite dime-sized; the current size of the US dime of 0.7 inches (17.9 mm) was established in 1837. The nickel is 21.2 mm in diameter, or .83 inches. The Toshiba 0.85 inch hard drive is therefore a "nickel disk" - but that's pretty darn close to what Niven had in mind.
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