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In linux:

$ dd if=/dev/null of=mysparse seek=1G count=0
$ du -b mysparse
549755813888    mysparse
$ du -B1 mysparse
0       mysparse

In windows I have been playing with fsutil but I can not get the size on disk to be smaller than the size in the file properties.

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FSUtil File CreateNew temp 0x100000
FSUtil Sparse SetFlag temp
FSUtil Sparse SetRange temp 0 0x100000
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you ran ahead of me... anyways you are correct. – bubu Jul 24 '11 at 7:27

May be this will help you: "SparseChecker" - manages sparse files on Windows NTFS It allows to operate with files, not with individual blocks of files as "fsutil" does.

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What @Mehrdad said is correct.

However, whatever you write to the file (even ranges of zero) would be considered data to the operating system (and thus space allocated) and only FSCTL_SET_ZERO_DATA() would allow non-space occupying zeros to be written.

fsutil sparse setflag [file]

would allow a file to be set as sparse file.

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