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You can install both the M.2 and 2.5" Drive; the unit has space for both products so you could install the operating system in the M.2 and use the 2.5" Drive for backup, or as you wish.
Also, you can see the M.2 and 2.5" SSD we have tested with this unit at the following link:
This is the Customer-Reported Peripherals:
Please note: If you choose to go with a different 2.5" drive, the NUC5I3RYH can accomodate a 2.5" drive thickness of maximum 9.5 mm. The proposed 2.5" HDD is at this thickness, but some drives are thicker. You may have already made your purchase, but this bit could be useful for future user reference.