A hardware modem does all operations on the modem itself, a software modem requires the CPU to do part of the work. But not all so called soft modems are the same, the better ones have hardware decompression and hardware DAC. Others have nothing more than a codec, or interface to the CPU, where the CPU does all the work. The best software modems can be better than some hardware modems, I've had my best luck with Lucent (now Agere) 1646T00 chipset modems, which use so little overhead that they actually work on some old 486's. Compared to that, many codec modems can require as much as a PII 350 to run.
<font color=blue>You're posting in a forum with class. It may be third class, but it's still class!</font color=blue>