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For years now - along with PKZIP - ARJ has been one of the most popular and powerful DOS and, by extension, Windows archivers and compression utilities around. Lately, ARJ even got a (third-party) Windows shell. But basically, ARJ was and still remains a command line utility. As such, it is extremely powerful (as regards power use and automation, nothing beats the command line - there's nothing that you can do interactively, with a GUI, any GUI, that comes even close to the automation power you get with the command line). That's why it would be a mistake to compare a console archiver, such as ARJ, with the Windows versions of ZIP, such as PentaZip, PKZip, WinZip...
Now, we should be careful not to mix apples and oranges, or software tools and compression algorithms. While all ZIP utilities use the same compression algorithm, ARJ has a proprietary compression algorithm of its own. At least as effective as ZIP, I would add. In terms of compression ratios, that is. In terms of speed - well, compression speed is largely a software implementation issue, although it also depends on the algorithm as such, of course. Anyway, you probably won't be looking primarily for speed in an archiver, I suppose, since you already sacrifice speed for space when you decide to archive files in the first place. Operating system support might be more of an issue here; and Windows natively supports the ZIP format, as you know. Although this should theoretically leave ARJ somewhat out in the dark, it is actually not so. Namely, the Windows "support" of the ZIP format is so incredibly poor and rudimentary that it leaves plenty of room for ARJ to sneak in.
In my opinion, as a command-line driven compression tool, ARJ complements rather than replaces the ZIP format supported by the OS. It's incomparably more powerful than the built-in ZIP support, but this power comes at a price; and the price is its overwhelming complexity. Just try to launch ARJ with the -? command-line switch and you'll see what I'm talking about: you'll get no less than 16 screenfuls of ARJ's "quick" online help: 16 screenfuls of commands, switches and configuration options!
Software Review - Pros
Extremely powerful configuration options that you can either set globally, or override on the command line.
Good compression.
Long filename support, of course.
Capable of spanning your archive across multiple (floppy) disks - not many archivers are.
Powerful archive handling, including auto-extraction, comments, chapters...
Speaking of which: chapter backup implemented the so-called rollback feature years before Windows XP!
Software Review - Cons
Way too complex to master. Even after years of use. Unless you have tons of time to dedicate to ARJ, and the will to become a complete ARJ geek in the end.
While ARJ supports auto-extracting archives, if you'd like to use ARJ for archiving an auto-starting app, say, a huge HTML book so that it can auto-extract and automatically open its index.html, you'll have a hard time. Better use some simpler technique/tool for that. Moreover, here's what ARJ's 6th Commonly Asked Question says about self-extracting archives:
6) Can I distribute ARJ archives freely?
ANSWER: Any ARJ archives (not self-extracting) can be distributed
freely. Commercial users must have a registered ARJ to make the
ARJ archives.
User Report - Tips, Tricks and Tweaks
General
Can be very dangerous. This is what happened to me once: I started a "clean-up" batch file - designed to do some maintenance, clean up temporary files etc. - from plain DOS (skipping config.sys and autoexec.bat). Well, somewhere in that batch file, there was an ARJ command meant to archive and delete all the files in the %temp% directory to another directory on the drive. Yes, the %temp% directory should've been assigned as an environment variable in config.sys - which I skipped at boot. Well, you can imagine what happened: the %temp% variable being empty, instead of the unneeded %temp% files, ARJ archived and deleted the root dir - that is to say, the entire C:\ disk! Luckily, after the first fright, I just de-archived the disk back to its original state, but you can only try to imagine what it is like to type dir c:\ at the prompt and see a virtually empty root dir...
Make it a habit (or an environment variable) to use the -hm1 or -hm! switch: with terabyte-size drives rapidly approaching, it's getting all too easy to exceed the 3000-filename limit when archiving your files.