OS install without an optical drive.

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I am in the process of specifying a mini ITX Sandybridge PC that packs enough CPU punch to satisfy my plan for serious software development. I won't be fitting a graphic card. My original intention was to fit a DVD drive for software installs but it occurs to me this results in a case that is not dramatically smaller than a small ATX case.

So I am considering ditching the DVD drive from the spec and looking for a case that just accommodates an ITX motherboard, 1 SSD, 8Gb of Ram plus power.

Is it realistic to do all software installs including Windows 7 from a USB 3.0 pen drive?
 
Is it realistic to do all software installs including Windows 7 from a USB 3.0 pen drive?

Yes.

The thing to do is make a list of all the software you need to re-install and check to see if you can get a digital version to copy over to the hard drive and install or not. Alternatively any discs that you have, rip an .iso of it on another PC and then mount it on the new PC to install them.

You can install Windows 7 using this tool which will create a bootable usb stick provided you have access the to disc image.

I haven't used the DVD drive on my PC for ages, I just used an external USB one if required and that's what you could get as a backup for the odd occasion you may need to use the DVD drive, or do what joshlad said.
 
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