Switching from "real" 3380s & 3390s to the emulated 3380s & 3390s has been an 
evolutionary path. 

For example, with the P370 and its derivatives, each DASD unit was implemented 
as a single file on the hosting PC; AWSDISK. Hercules implemented the same file 
structure and later added a compressed version with track updates stored in a 
new file that could be later reorganized back into the base. 

I would guess that the DS8K boxes today got a lot smarter and implemented the 
track data or even track record data as separate objects managed by a volume 
TOC mechanism; which facilities all the DS8K enhancements of volume cloning, 
fast copy, check pointing, versioning, etc.  "Sparse type" file systems are 
also more common today. 

So individual dataset space is not a big issue.  You have to think at the 
enterprise level. 

However, the individual still needs to allocate their datasets correctly to 
satisfy the OS ... or for the zOS people, get an X37 abend processor...

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