New Technology Boosts Hard Drive Capacity – Yahoo! News:
Since the first hard drive was introduced 1956, bits have been arranged in a flat, horizontal fashion on the spinning platters. To boost capacity, engineers reduced the size of the particles whose magnetic state is what actually remembers data.
But with some drives now topping out at 500 gigabytes, the miniaturization is nearly at its limit. Made any smaller, the particles can begin to interfere with the magnetism of their neighbors. The result is disastrous for data.
By storing bits in a vertical, or perpendicular, arrangement, engineers are able to boost capacity by taking advantage of the real estate that is freed up.