They are both a hardware and software requirement.
Pixel shaders (and shaders in general) are part of your video card (or GPU) hardware. However, you also need a version of DirectX or OpenGL*/OpenGL recent enough that it'll be able to take advantage of yoursupport that video card's capabilities - otherwise they might as well not exist, or your game can't really use them.
Without too much detail: shadersShaders are part of the rendering process. They do a tremendous amount with very little resources and they're largely responsible for that contribute massively to your gamesgame looking totally awesome and they do it with very little resources. They rock, so basically every game developer willis going to be using them.
* In case you are unaware of their role, DirectX and OpenGL are drivers which act as the go-between between your game and your video card. If new games are beginning to warn you that you need new shader versions, your system's becoming obsolete.
Can't run the shader version your game demandsNeed to upgrade?
Wikipedia has a list which covers the maximum shader version supported by various video card series. Check thatMake sure your system has a recent enough version of DirectX (here's how to do that) - Windows Update will normally keep that/OpenGL are up to date, update them if not, then pick a series from that list that covers your version and go buy yourself a new video card.
Pixel Shader 3.0 specifically was released in 2004, so judging byconsidering how old it is, video cards that don't support it probably aren't even sold anymore,.