Thanks to their record setting 0.85 inch hard drive, Toshiba should claim a new title in 2005 with their new portable audio player - "world's smallest iPod competitor."
First details, right here.

Toshiba will release the smallest portable audio player in the world containing a hard drive, in 2005. It will use the company's 0.85" hard drive, confirmed to be the world's smallest by September's Guiness Book of World Records. Its competition will be none other than the "iPod" series of audio players from America's Apple Computing, popular even in Japan.

Audio players containing hard drives can record more songs thanks to their high capacity, and it looks as though they are being purchased in place of MD and CD players. Released o­n the 24th domestically, the iPod mini claiming to be the "world's smallest and lightest," is a business card sized player that contains a 1" hard drive.

The 0.85" hard drive announced by Toshiba in January is 6 grams lighter than the iPod mini's 1" hard drive, allowing the new product to be under 100 grams. A 2GB or above hard drive will be furnished, allowing for the recording of hundreds or thousands of songs.

Inspired by:
http://www.asahi.com/business/update/0729/004.html [1]

Another world's smallest HD (TechJapan article):
http://www.techjapan.com/modules.php?op=modload&name=News&file=article&sid=38 [2]