Well I decided to make this thread only as a suggestion for PC users searching to get better performance with sacrificing as little image quality as possible. The setting that by far impacts the performance the most is the shadow quality. I noticed how the FPS varied so much depending on the place, most of the time it ran fine in the 50 - 70 FPS outside in even with a very huge landscape but at the same time FPS could be sometimes dropping down to like 40 FPS in a small house or in a cave whit not much things going on which didn't make much sense so I investigated the different options and only Shadow quality immediatly brought a night and day difference in performance. Take a look at this small example below.

Settings: All screenshots are set to Ultra quality (except manually changing Shadow Quality setting), 1680x1050, AF16x/AA4x, vsync disabled.
Rig specs: i7-860 @ 4.0 GHz, GTX 460 1GB OC @ 880/1760/1000 MHz, 4GB RAM

Shadow Quality: Ultra

[img]http://img811.imageshack.us/img811/715/tesv2011111422110096.jpg[/img]
FPS: 51

Shadow Quality: High

[img]http://img715.imageshack.us/img715/6413/tesv2011111423171365.jpg[/img]
FPS: 90 (+76%)

Shadow Quality: Medium

[img]http://img718.imageshack.us/img718/6739/tesv2011111423192520.jpg[/img]
FPS: 121 (+137%)

Shadow Quality: Low

[img]http://img593.imageshack.us/img593/852/tesv2011111422100623.jpg[/img]
FPS: 133 (+160%)

51 vs 133 FPS (160% difference!), for a small simple house. Yes the shadows look jaggied at low but not all, such as trees and grass etc look fine and you won't see the difference at a distance, only up close. Anyway it's probably been discussed before but I post just in case.

EDIT: OK here's two more ridiculous screenshots, why you ask? Well it just FURTHER shows the CPU bottleneck scenario as I now tested with Low quality profile setting (to make sure GPU performance won't be a limiting factor).

Settings: Low quality profile (except manually changing Shadow Quality), 1680x1050, no AF/AA, vsync disabled

Shadow Quality: Ultra

http://img820.imageshack.us/img820/7889/tesv2011111423562766.jpg
FPS: 55 ! (wow barely any increase, compare to 51 FPS at Ultra settings!)

Shadow Quality: Low

[img]http://img32.imageshack.us/img32/4220/tesv2011111423550003.jpg[/img]
FPS: 173 (+215%) !

__________________________________________________________________________________________________________________________________________

EDIT2: OK here's the outside, forest landscape comparision, here GPU also becomes the bottleneck.

Settings: Ultra quality profile, 1680x1050, AF16x/AA4x, vsync off

Shadow quality: Ultra

[img]http://img6.imageshack.us/img6/8647/tesvultraqualityshadowu.jpg[/img]
FPS: 53

Shadow quality: High

http://img4.imageshack.us/img4/5024/tesvultraqualityshadowh.jpg
FPS: 73 (+38%)

Shadow quality: Medium

http://img812.imageshack.us/img812/872/tesvultraqualityshadowm.jpg
FPS: 83 (+57%)

Shadow quality: Low

http://img803.imageshack.us/img803/954/tesvultraqualityshadowl.jpg
FPS: 88 (+66%)


Settings: Low quality profile, 1680x1050, no AF/AA, vsync off

Shadow quality: Ultra

http://img703.imageshack.us/img703/3184/tesvlowqualityshadowult.jpg
FPS: 76

Shadow quality: Low

http://img829.imageshack.us/img829/2724/tesvlowqualityshadowlow.jpg
FPS: 151 (+99%)

So this test here tells us that here I also become GPU limited why the low quality profile with low shadow quality settings go as high as 151 vs 88 FPS if using Ultra quality. You can still tell that even here the CPU performance matters a lot but GPU becomes the bottleneck here with Ultra quality settings too. I'd recommend sticking to perhaps "high" on Shadow quality, some users with slower CPUs might even wanna concider medium. Using Ultra quality shadows will result in FPS drops here and there even on the most powerful overclocked CPUs out there in some places. If you're getting a severe FPS drop in this game it's most likely the case that your CPU is bottlenecking while you're using Shadow quality setting that is higher than what your CPU can cope with.

Conclusion: looks like shadows might be software rendered by the CPU which would explain both the FPS drops in some places even with the most powerful computer rigs as well as the blocky unsmooth shadows.

Go to Markarth and report back with the results. I'm curious what shadow quality does to performance there. That place is a fps-eater.

Well unfortunately I've been very busy and haven't been able to play much Skyrim yet, I'm like just on my way to Whiterun after having done all sidequests and investigated caves around Riverwood but some1 else can probably do the comparision too. I wonder what's the reason behind the poor shadow quality performance, if set to low it runs beautifully everywhere for me so far with no noticable slowdowns, since I'm a 120Hz LCD monitor user I gladly take those extra FPS over the for me relatively small change in gfx quality as Skyrim runs really smooth when the FPS climbs to about 100 FPS.

Thanks for the Tip. I'm definitely concerning about low frame rates on my Laptop. Aslong as the shadow is still there, I'm not that bothered how good it looks.
The actual character(s) matter to me more Tbh, so if shadows are a hog on the resources. I'd rather focus on making it look better elsewhere.

The reason for this is shadows are rendered on the CPU (which was NOT designed for it) rather than the GPU (which WAS designed to render shadows), due to consoles having powerful CPU's and rather weak GPU's. Even setting shadows down to High can drastically increase framerates. I play with shadows on High, everything else at the Ultra setting, and I get a very playable, usually very smooth framerate (though I haven't used FRAPS or anything to test it, I'd guess an average of 50-60 in dungeons and other close-quarters interior areas, and 30-45 in open outdoors areas). Intel Core 2 Quad Q9300 @ 2.5GHz, GTX 550 Ti FPB.

I've heard that the shadows are rendered on the CPU instead of the GPU, just so consoles can actually run the game. Various users have said their GPU usage is around 40% with ultra shadows because their CPU is working so hard it can't pass info to the GPU fast enough.

Yea ofc you don't have to use low shadow quality to get a boost, just wait a sec and I provide high and medium quality shots from that same spot as well for comparision's sake. So it's done by the CPU huh, well that would explain it...

It seems 2500k 4,2 ghz cant handle shadows, so it drops gpu usage from 99 % -> 50 % because cpu cant handle shadows in some places.

Updated OP with high and medium quality screenshots too. Seems there's quite a difference in FPS between all the settings.

Yea this would be a proof / indicator of CPU limited scenario. Since CPU is the bottleneck, GPU doesn't need to work 100%.

Any1 care to post your comparisions of some spot you know is more demanding? Markarth town for example? Just use a save game for the spot you test where FPS doesn't vary too much (ie. many townspeople walking around for example)

Now we know why dynamic shadows were dropped from Oblvion!

lol yea I might go test the following, set to low quality profile settings and then only change shadow quality manually to see if the GTX 460 probably became the limiting factor at low shadow quality but everything else is maxed, so there might be even bigger difference between Ultra and low quality shadow setting in case CPU is the bottleneck still at low shadow quality setting when everything else is set to low too.

OK here's two more ridiculous screenshots, why you ask? Well it just FURTHER shows the CPU bottleneck scenario as I now tested with Low quality profile setting.

Settings: Low quality profile (except manually changing Shadow Quality), 1680x1050, no AF/AA, vsync disabled

Shadow Quality: Ultra

http://img820.imageshack.us/img820/7889/tesv2011111423562766.jpg
FPS: 55 ! (wow barely any increase, compare to 51 FPS at Ultra settings!)

Shadow Quality: Low

[img]http://img32.imageshack.us/img32/4220/tesv2011111423550003.jpg[/img]
FPS: 173 (+215%) !

Shadows are being rendered by the CPU. CPU is your bottle neck. The game also has specific lag points that seem to relate to NPC AI and shadows both maxing out what seems like a hard cap on Quad core CPUs. My roommate has an epic 4.1 ghz OC dual core from God knows when and he runs the game better than my GTX 470 with a 9600 GT until I disable shadows all together. Its hilarious.

We really need one of these types of topics stickied so we won't get so many similar topics.

Mind doing a test outside? From my experience going from Ultra to Low shadows outside comes with a serious visual difference. Ultra to High, not so much.

Yes, a test outside, and a test inside a city, preferably Markarth. Hey, I might do them myself.

Call me an idiot, but I love bottleneck tests.

EDIT: unfortunately, I have a crappy 2.6Ghz Core2 duo, and not the OP's uber 4Ghz i7.

Yea I could do some test somewhere outside in the town Riverwood or maybe in the very beginning part after exiting the first cave you escape from where there's huge landscapes visible for example. Now this game is a SUPERB CPU performance test when kept shadow quality at Ultra. Every CPU reviewers/benchmarkers should use Skyrim in their tests haha!

I get 40fps on ultra and 100 on low

Great thread guys - I'll lower mine to high or medium (it really doesn't look much worse from the screenshots).

Ok, I've established that the low framerate in Markarth is also heavily CPU limited.

CPU: 2.66Ghz Core 2 Duo
GPU: GTX 460 @ 710Mhz

I picked a http://i609.photobucket.com/albums/tt172/owalles/Fallout3/markarth_lowfps.jpg with the lowest framerate
On Ultra I got:
20 fps
I then disabled AA and AF. It was still:
20 fps!!!

Can you spell CPU-bottleneck?

Then I set everything to Low. Result:
36 fps
I increased Shadows to Ultra:
25 fps

Massive drop in framerate. Still, higher than 20, so shadows is not the only CPU-eater. Will test now where the other 5 fps are lost.

May want to do some exterior comparisons, I think the higher shadows settings also increases the distance at which the shadows are drawn, which won't make a difference in interiors.

Yea this is true, the shadow distance is quite a bit better with ultra quality. I've taken the shots, will post them here as I get it sorted. Took shots under same settings as used in the first post, ultra quality with all the different shadow settings as well as low quality profile settings and shadow quality set to low and ultra. I'd still recommend using perhaps "high" shadow quality settings for most people unless you do have a very beefy CPU (read overclocked Sandy Bridge 2xxx) for a much more stable FPS as the FPS / CPU performance bottleneck will vary a lot depending on place, like currently the drops often seems to occur inside, caves or houses or in some towns etc but is more stable outside towns in the middle of the forest (where GPU becomes also stressed).

Yeah, I get a terrible framerate if I put the shadows any higher than "medium". Any other setting I can change without affecting framerate too negatively (except AA, obviously, cranking it up stupid high kills the crab framerate). I'm pretty sure it's because of the hackjob Bethesda did with trying to worm these dynamic shadows into Gamebyro.

Doing these comparisons indoors (where FPS is less hindered in the first place) is a flawed test in my opinion.

There's another thread asking people to verify their FPS in a specific place in Whiterun (just outside Dragonhaul on the steps). Even my GTX 470 SLI @ Ultra 1920x1080 garners a mere 21/22FPS.

I'm not at home or I'd try it. Would be nice to see that scenario with all Ultra... but changing Ultra/Low shadows. The other thing is how much impact Shadows make in more open areas.

Honestly, my 470's usually run at like 45-50% usage. However, I haven't noticed my CPU go over 55% either. So I'm not yet convinced it's a CPU issue. Have to play with it more.

I noticed you have a quad core CPU. Skyrim http://www.tomshardware.com/reviews/skyrim-performance-benchmark,3074-9.html only uses two cores, so 55% sounds about right for 2 cores at 100%.