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I would like to use VMWare Fusion or Parallels (or another option for running Windows within OSX; not Wine), but I am concerned about the hard disk space requirements. How can I reduce the hard disk usage when creating a new Windows WM?

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Both Fusion and Parallels give you the option of creating dynamically sized virtual hard drives. They allow you to specify the maximum size of the virtual hard drive, but do not actually consume (or reserve) that much disk space on the real hard drive. So to answer your question, just be sure to create a dynamically sized virtual hard drive. (I believe this is the default in both Fusion and Parallels.)

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When you make a new virtual machine, set the hard drive as dynamically expandable (rather than have it allocate the whole virtual hard drive size right away). From time to time you can also compress the virtual hard drive size. Also use a version that doesn't take too much space (e.g. Windows XP doesn't need as much space as Windows Vista). One important thing to consider too is that the more you install, and reinstall, and change, and add files (even if you delete them), the more space it uses. Even if you're VERY careful, you should have at least 10GB available for the virtual machine.

Of course, you also have the option of getting a relatively small external hard drive for not too much money just for the virtual machine if you're really concerned about the space. However, if you'll use the VM frequently, that may not be the best option (unless maybe you get a firewire or USB3 SSD).

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