Building A System from Scratch, Part I - Hard drive, floppy drive, peripherals
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Mass produced hard drives are more prone to failure than most other components. I have been led to believe that one hard drive in every 10,000 produced will be faulty at the point of sale. Any drive you buy, even from a reputable maker such as Maxtor, Western Digital or Seagate can be faulty, but I would nevertheless still recommend that you go with one of these brands.
When buying a drive, bear in mind that a drive with a quicker spin (7200+ rpm) and a lower seek time (8.5- ms) will have a direct impact on the general speed of your PC. When buying more than one hard drive, it is recommended that you buy from two different suppliers, because two drives from the same batch are likely to fail at similar times. If you go for an IDE hard drive rather than a SATA (Serial ATA) hard drive, buy one that is compatible with ATA133 and get ATA133 cables as this will improve the read/write data speed. ATA133 ribbon cables are normally yellow as opposed to grey for regular ATA cables. SATA drives however have faster data transfer speeds and the cables are far more manageable for those that want to keep the inside of their cases clutter free.

While many would say that floppy drives are now obsolete, some types of hardware, particularly SATA hard drives for example, require the installation of third party drivers at OS install time, and these will have to be installed using a floppy disk. Besides, you can pick up a decent floppy drive for a couple of dollars, so why close this option off?
All that's left now is the peripherals like the monitor; I would advise spending a little bit more on an Iiyama LCD as they have very high quality displays and rarely have "dead pixels." Most LCD display manufacturers have a dead pixel guarantee, where they will replace any monitor that has more than five dead pixels at the point of sale. If you are unfortunate enough to buy a monitor that has four dead pixels, you are stuck with it. These dead pixels are points that do not display light, and therefore show up on the screen as black dots, which will reduce your viewing pleasure.
You may choose a keyboard that has numerous shortcut buttons and gadgets on it that you may or may not use, or you can choose a basic keyboard for a similar amount of money that will be sturdier and of a generaly higher quality than their gadget infested counterparts. For a truly cool looking keyboard, I would recommend an EluminX - you'll pay more (a lot more), but you'll get a very attractive and well-constructed keyboard. For a decent cordless, optical mouse, look no further than the Logitech MX700; also a winner of the Dev Hardware Award, that can be found in the sub $50 price bracket.
I'd also recommend picking up a computer tool kit; not only do these usually contain an antistatic wrist strap (and if it doesn't, find one that does), but they also contain all kinds of useful things like incredibly tiny pliers for fishing out screws that you've inadvertently dropped into the edging of your case, and a supply of cable ties for making the inside of your case look less like a food fight inside a spaghetti factory.
Static discharge is a silent killer of sensitive computer component circuitry, and can render an entire motherboard useless with no telltale spark or audible cracking sound. If you are forced to work without an antistatic wrist strap, ensure that you touch something metal that is earthed, like a radiator, each time you touch any component.

Additionally, these toolkits will contain screwdrivers that are of the correct size and that are not magnetized. Household screwdrivers are normally too large to be able to work comfortably inside a PC case, and although it's unlikely that a magnetic charge as weak as that carried by some screwdrivers will damage your components, it has been known to happen so why take the risk?
It's tempting to start putting things together as soon as you start to acquire the components, but in reality it is better to get started when you have everything with you. When you do have all of the pieces, set aside enough time to do it all in one go, which will typically be at least an hour. Try to work in a well lit environment with plenty of room to lay out everything in an orderly manner before you begin. Keep everything in its anti-static packaging until you are about to fit it; this will help protect the components while they are laying in wait. Read on to part 2 for step by step instructions on setting up your new PC.
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