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DriveSpace 3

Disk compression (or more correctly, file compression) was popularised by Stac Electronics with Stacker, and introduced into Microsoft's operating systems with DoubleSpace in MS-DOS 6. After some legal wranglings, it was soon removed, then replaced and finally upgraded and renamed, and emerged as DriveSpace in Windows 95. The Microsoft Windows 95 Plus! pack had an even better version, DriveSpace 3, and this, plus its companion, the Compression Agent, appeared in later builds of Win95 including OSR2. Both survive with barely a change in Windows 98, and only the About boxes give them away.
Disk compression is different to the more normal type of compression used by utilities such as PKZip. It works in basically the same way - using clever algorithms to spot repeated characters in a file, and/or using 'shorthand' methods of describing the contents of the file - but once set up, the process is seamless. DriveSpace creates a single file on your hard drive (the Host drive), and this file becomes a new virtual drive, complete with drive letter. So, you could create a new drive H by using some space from an existing drive C, and while it would work like a normal drive, you'd be able to store more files on it. It's also possible to compress an entire drive, though the same hosting process goes on behind the scenes.
The savings this makes in space are unpredictable, as some files compress better than others. Programs may only shrink by 20-30 per cent or so, while .BMP graphics virtually disappear, shrinking to perhaps one tenth of their original size. DriveSpace 3 includes some even more efficient compression routines, including the modestly-named UltraPack option. These take more time, so are run separately, using the Compression Agent. Using any compression also causes a slight performance hit as files are decompressed in use, though the processor time spent can be balanced by the reduced time reading it from the hard disk.

DriveSpace can compress removable disks, too, such as floppies and Zip disks, though this introduces the possibility that other people may not be able to read them if they don't have Drive Space installed. All of these compression operations can be reversed, as long as you have room on the drive for the files in their uncompressed states.
There's a fly in the compressed ointment under Windows 98, though... DriveSpace 3 can't compress FAT32 drives - Doh! An unmissable marketing opportunity looms for third-party upgrades.
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