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(Well, you're half right. SM3.0 (Unified name for Pixel Shader 3.0 and Vertex Shader 3.0) was supposed to increase image quality, and it does, but not enough to revolutionize anything. Whats more important, SM3.0 increases performance.
There is a difference between better image quality and increase in performance. Performance refers to the FPS and sort of stuff. SM3.0 cards get better performance than those lacking SM3.0. Thats why a GeForce 6800GT can keep up with cards like the X800XT which should, in theory, smoke it. You don't NEED SM3.0 in a game to run it, but it certainly helps. Kinda like SSE3 in Processors; Venices perform better than Newcastles, at the same clockspeeds, because they have SSE3 and the Newcastles don't.)
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well first of all i would say go with the 7800gt or gtx what ever dollar your rolling on. and also remeber the x850xt doesnt support sm3 and lets talk about sm3 here, last time i checked the 7800 series, and 6800 series all failed several graphical spurts of SHADER MODEL 3 TESTS. HMMM AND THIS WAS ALSO MENTIONED FROM ATI. SO KEEP THAT IN MIND ALL THOUGH SM3 JUST SOUNDS COOL IT REALLY DOESNT TWERK! ALTHOUGH HANDS DOWN THE 7800GTX HAS ALL THESE BOARDS, I WOULD GO WITH IT, I BELIVE 7800/6800 SERIES FAILED LIKE 11 OUT OF 12 SM3 TESTS
YOU CAN ALSO GOOGLE THIS UP IF YOU LIKE.and for some reason everybody brings up uhhh der der it dont got sm3! errrrrrr which really they dont know what there talking about and no im not some ati fan boy! i actually like both companies very well and pick upon performance for dollar its just you shouldnt dig up compare ati too nvidia cuz nvidia has sm3, because last time i checked ati was working with 256bit memory interface waaaayyy!! before nvidia was but again get the 7800gt or gtx