software will never "replace" hardware; there is too much of a loyal following basically, integration seems more the future then anything.
and as far as fruity loops abilities...
ITS A SEQUENCER.
guess what? there a million sequencers, and if you give me any sequencer (and a day or so to learn my way around the interface) and a source for sounds, i can make anything just as good as if i made it on an mpc, cubase, reason, dr 202, whatever.
the thing people forget about are the fact that everything has its own audio engine, soundcards differ, outboard gear differs, effects differ from setup to setup, but ANY multitrack sequencer will do the job, harware OR software. shaping a sound, mixing, mastering, etc are all necessary elements as well, and those are elemnts that differ from program to program, machine to machine. roland COSM Effects are much different from waves, etc. they do different things. i would have a different sound if i were running things through a roland cosm box then i get using waves.
the sequencer, however, is fairly simple- press record and play, the rest is up to you.
im a software guy too, but i know im gonna be getting some monitors, a decent soundcard (and much much more slowly hehehe) which is hardware, nowadyas, the two need eachother. all hose nice little digital boxes of hardware formant was talkin about have at least one ic chip in them with some type of software embedded, otherwise they would just be expensive boxes with knobs and flashing leds and little other functionality. and i know my software produced shit is gonna be sounding a lot nicer and crisper if i spend some decent money on some decent hardware, like monitors and a good soundcard at least, see what im sayin. 
