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Raspberry/Orange Pi or ZimaBoard?
(alien.top)
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Or just visit a local pawnshop and get PC within your budget.
One advantage is you get x86 architecture, good IO quality and case hosting a couple drives.
Just pay attention to specs.
Or watch local craigslist.
Load that PC with Linux of your choice.
Linux can run on very low memory specs. Even 512MB. Don’t pay much attention to CPU. Just about any in last 10 years will work for you.
2 GB of RAM will be plenty.
If you plan on using old drive, make sure to have backup for your data.
Windows on old hardware will be pain. Linux will be fine. Go for Gnome or XFCE desktop. Gnome is simple, quite lite these days. Xfce is lighter and more similar to windows. I generally don’t go for distribution based desktops like mate.
I am Arch guy, but it’s not an option for non-tech people. Thus Manjaro (Arch based) or Ubuntu (safe mainstream).
You will get more performance out of Manjaro, because Arch doesn’t push flatpack on users, which slows down things.
I agree with everything in your post except for this part. He's planning on running a Plex or Jellyfin server, which can benefit greatly from an Intel CPU with Intel QuickSync Video (QSV) capability. The iGPU in those processors are capable of multiple 4K transcodes without breaking a sweat.
It's worth paying a little extra for one of these CPUs.