France's Albert Fert and Germany's Peter Gruenberg received the 2007 Nobel Prize for Physics for their work in the field of nanotechnology. They observed a quantum mechanical effect called Giant Magnetoresistance (GMR) which occurred in thin film structures composed of alternating ferromagnetic and nonmagnetic metal layers.

The Royal Swedish Academy of Sciences cited their discovery of Giant Magnetoresistance (GMR), later used in technology to read data on hard disks via read-out heads that scan and register different fields of magnetization on the hard disk, in awarding them the prize.

"Not least thanks to this discovery the size of computers has been reduced dramatically. Just look at the giants from 1964. And the price for personal computers per megabyte has fallen dramatically too," said Nobel Prize committee head Per Carlson. Fert and Gruenberg "independently discovered a totally new physical effect - giant magnetoresistance or GMR" in 1988, the Novel Prize committee has found.

Gruenberg joked that somebody told him that if there is a phone call from Stockholm it could only be a Nobel prize. However, Gruenberg said he somewhat expected the prize, because they have received several prizes for their outstanding discovery.

"The MP3 and iPod industry would not have existed without this discovery," Borje Johansson, a member of the academy said. "You would not have an iPod without this effect."

The two actually discovered the effect separately. A research team led by Peter Grünberg of the Jülich Research Centre, who owns the patent, noticed the effect in 1988 in Fe/Cr/Fe trilayers. The same year, Albert Fert of the University of Paris-Sud, discovered the same phenomenon in Fe/Cr multilayers and explained the physics behind it. Since then, GMR has been used extensively in the read heads in modern hard drives and in non-volatile, magnetic random access memory (MRAM).

On Monday, Mario Capecchi and Oliver Smithies of the United States and Martin Evans of Britain shared the Nobel Medicine Prize for their work on stem cells. The Nobel Prizes were designated in Alfred Nobel's will in 1895 (they were initially only for physics, chemistry, physiology or medicine, literature, and peace). Alfred Nobel was a Swedish chemist and industrialist who invented dynamite and a type of blasting cap. The first prizes were awarded in 1901, five years after his death.