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    My gut reaction is it has to do with buffering. Commented Aug 20, 2012 at 22:52
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    @bahamat I think you're right. The echo does a separate write() for each argument. The sed buffers them. So the first version has a million writes to a regular file, going through a filesystem driver into the block device layer, and the second version has a million writes going into a pipe and somewhat fewer writes going through the more expensive layers of kernel code. Commented Aug 20, 2012 at 23:03
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    @bahamat Definitely buffering. time echo ... |cat >file and even time echo ... |perl -ne 'print' are similar times to the sed version. Commented Aug 20, 2012 at 23:08
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    Thanks to everyone for the good explanations... So for big multi-line writes (in bash), cat has gained a Useful Use of Cat point :) Commented Aug 21, 2012 at 0:03