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No, they use a lossless compression algorithm like zip.  That aspect is what makes these drives variable in performance depending on how well the data you are saving compresses.  If you check the reviews on them you'll often see the reviewers test them twice with compressible (i.e. text or documents) and incompressible random data.  Saving video files to them is roughly like the random data in those tests, so you actually get lower performance since the drive can't compress it any further.

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Will the on the fly data compression on a sandforce ssd effect the quality of uncompressed video files?

SandForce based SSDs are best in handling on the fly compression! Any SSD controller for that matter will have different algorithms to handle compressible/incompressible data differently. I am using Intel 520 SSD which is best in handling data no matter what kind they there & still very fast! I was fortunate to go through this white paper by them before I could finalize on this technically advanced SSD :) For your ref: http://www.intel.com/content/dam/www/public/us/en/documents/technology-briefs/ssd-520-tech-brief.pdf

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