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If you buy a external drive that is formatted FAT (for windows), you will have to use the disk utility app to format the drive to Mac OS Extended (Journaled), before you can use it as a time machine backup drive.
 
I use a Western Digital portable external drive with my MBP and a Western Digital My Book World Edition NAS on my home network and Time Machine works flawlessly with both.
 
I've used it on three different drives. I think Time Machine sucks though. It fills up the drive too quickly and if you want to delete the backups it takes ages to empty the trash.
 
Time Machine even works with any drive connected thru your Airport Extreme.

Time Machine + Carbon Copy + WinClone is a good combo.
 
I've used it on three different drives. I think Time Machine sucks though. It fills up the drive too quickly and if you want to delete the backups it takes ages to empty the trash.

There's no need to ever delete old files with Time Machine. When the disc gets full, it automatically deletes the old files.
 
I am using an Iomega Firewire drive external to my iMac and it works just fine and is very fast with Timecapsule use.
 
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