You can actually use a USB flash drive if it is large enough (and not transferring hundreds of GB's of games), and not have to worry about an external HDD. The external is only needed if you have way larger than any USB flash drive size.
I prefer to NOT copy over all the games. Just the P.T. demo and saves, due to it being MUCH faster to just insert a disc and install off of that, or DL from PSN. Transferring tons of data takes hours of downtime... where I can have PSN games reinstall when I am not home using the website while the PS4 is in rest.
Only issue would be those with data caps on their internet, then I understand the 'copy everything' method.
Here is the manual for backup/restore.
You can select what games or apps to back up. I do not worry about backing up saves since they always copied over fine, and are also in the cloud storage worst case. But if you are OCD then it does not hurt to do a back up as well, lol.
Note: It says saves do not copy over, but it may be out of date, because all of mine did when I put the new HDD in just before UC4.






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