Not at all. Suppose you have 13Gb of text and CSV numerical datasets, and need to move them onto a smaller volume, say a 4Gb USB memory stick? You'd use zip or tar or whatever other compression tool you have to make the data portable.
Leopold at the time wasn't having problems with attempting to compress to a smaller volume, the problem was likely due to the operating system not being able to handle the number of file/folder handles due to how many had been stored. (There's a slight difference in how a server system can store information in a compressed format and how a desktop can access it, at least in old OS's) Servers tend to be set to handle more file handles due to being designed to deal with more than one user at a time.
