Below are the methods available to compress backup in SQL 2000 and SQL 2005. Please comment incase you need more information on this!
Method 1
NTFS Compression available in Windows Servers using NTFS File Format.
Method 2
Using GZip (Best Compressing Software – Open Source Freeware) compress the .bak files.
Method 3
Using Gzip Compress backup on the fly using pipe read/write (Only in SQL 2000)
Method 4
Either add more disk space or buy backup compression software like litespeed, HyperBack.. or use SQL Server 2008 with backup compression technology...
I did a trial compression using above methods and below is the ratio of compression...
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