
The breakthrough underpins how data is read from hard disks
French scientist Albert Fert and Peter Grunberg of Germany have won the 2007 Nobel Prize in physics.
They discovered the phenomenon of "giant magnetoresistance", in which weak magnetic changes give rise to big differences in electrical resistance.
The knowledge has allowed industry to develop sensitive reading tools to pull data off the hard drives used in everyday computers.
It has made it possible to radically miniaturise hard disks in recent years.
Matin Durrani, editor of Physics World, a journal published by the UK's Institute of Physics, said the award had gone to "something very practically based and rooted in research relevant to industry".
"It shows that physics has a real relevance not just to understanding natural phenomena but to real products in everyday life," he added.
If GMR is to work, structures consisting of layers that are only a few atoms thick have to be produced.
For this reason GMR can also be considered "one of the first real applications of the promising field of nanotechnology", the Royal Swedish Academy of Sciences said in a statement.
"Applications of this phenomenon have revolutionised techniques for retrieving data from hard disks," the prize citation said. "The discovery also plays a major role in various magnetic sensors as well as for the development of a new generation of electronics."
A hard disk stores information, such as music, in the form of microscopically small areas that are magnetised in different directions.
The information is retrieved by a read-out head that scans the disk and registers the magnetic changes.
The smaller and more compact the hard disk, the smaller and weaker the individual magnetic areas.
More sensitive read-out heads are therefore required if information has to be packed more densely on to a hard disk.
Last year, US scientists John C Mather and George F Smoot won for their work examining the infancy of the Universe.
They were honoured for their studies into cosmic microwave background radiation (CMB), the "oldest light" in the Universe.
The research has aided the understanding of galaxies and stars and increased support for the Big Bang theory of the beginning of the Universe.
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