Two scientists whose work allowed the development of the iPod and powerful laptop computers were rewarded today with the Nobel Prize for Physics.

Albert Fert, a Frenchman, and Peter Grünberg, a German, have been jointly honoured for creating the technology used to read data on hard disks.

Their research has been critical to shrinking data storage systems, and without it modern MP3 music players and laptops with gigabyte memories would be impossible.

Borje Johansson, a member of the Swedish Royal Academy of Sciences, which awards the prize, said: “The MP3 and iPod industry would not have existed without this discovery. You would not have an iPod without this effect.”

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Dr Fert, 69, and Dr Grünberg, 68, independently discovered a physical effect known as giant magnetoresistance, or GMR, in 1988. They will share a prize of 10 million Swedish Kronor (£755,000).

In a GMR system, very weak changes in magnetism generate much larger changes in electrical resistance. This makes the effect perfect for designing digital memory systems, and for miniaturising them on to progressively smaller hard disks.

Information is encoded in microscopically small magnetised areas, which are then registered by a read-out head and translated into electric current. Changes in electric current then make up the ones and zeroes of digital data.

The first GMR read-out head was released in 1997, and the technology has since become standard.

The Nobel citation decribed the discovery of GMR as “one of the first real applications of the promising field of nanotechnology.”

It added: “Applications of this phenomenon have revolutionized techniques for retrieving data from hard discs. The discovery also plays a major role in various magnetic sensors as well as for the development of a new generation of electronics.”

British physicists said the award was richly deserved, and that GMR was among the most obvious and life-transforming daily applications of basic research in the physical sciences.

Ben Murdin, Professor of Physics at the University of Surrey, said: “GMR is the science behind an ubiquitous technological device. Without it you would not be able to store more than one song on your iPod!

“A computer hard disk reader [a bit like a gramophone needle] that uses a GMR sensor is equivalent to a jet flying at a speed of 30,000 kilometres per hour — roughly once round the globe in a single hour — at a height of just one metre above the ground, and yet being able to see and catalogue ever single blade of grass it passes over.”

Peter Main, Director, Education and Science at the Institute of Physics, said: “Discoveries in physics shape the world around us but the effect of Fert’s and Grünberg’s discovery of Giant Magnetoresistance has been more visible than most with a massive impact on industry and our everyday lives.

“The capacity of today’s computers for data handling and storage has only been made possible by applying GMR to increase data-holding and read-out capacities.”

Professor Jim Al-Khalili, of the University of Surrey, said: “It’s no good having computer hard drives that can store gigabytes of information if we can’t access it. The technology that has appeared thanks to the discovery of GMR in the late 1980s has allowed hard disk sensors to read and write much more data, allowing for bigger memory, cheaper and more reliable computers.

“GMR is one of those wonderful phenomena from the weird world of quantum physics that has been put to use very quickly. It involves very thin layers of different magnetic materials and the way they allow tiny electric currents to pass through them.”

Dr Grünberg said: “The development of computers showed in the last years that this was an important contribution.”

Dr Fert said: “This is a surprise for me but I knew that it was possible. I knew I was among the many candidates.”