[David Roth Weiss] "There is precious little (if any) difference in output quality --that really should not be a consideration. Hardware encoders are essentially for high volume, high budget situations where speed is the essential variable. They're a great luxury if you can afford them."
I think this is about as far from true as can be. Perhaps speed is the biggest concern when considering a prosumer encoder in the <$4000 range, but the story is much different for professional encoders. There is a very large discernible difference in quality between professional hardware encoders and software encoders, and quality should be the PRIME consideration in your choice.
It is true that high-volume production facilities will likely be hardware based, but the real-time performance often has little to do with their choice for feature film encoding. In actuality, feature film compressionists will do intensive quality assurance on their encodes that dwarfs the extra time a software encode would take. Besides which, they have the budget to afford dozens of computers set up as an encoding "farm" if that was the only consideration. Also, even high-end hardware encoders can take several times the length of the source to finish encoding when taking advantage of the highest quality settings (they do several passes).
Those QA steps are among the things that they currently do not get from software encoders (such as the ability to do a side-by-side A/B comparision of the source footage and the encode using machine control and video output, or segment re-encoding that allows you to selectively up the bit rate on GOPs that have artifacts in a VBR encode...). But there are many other reasons, including quality that is not achievable in commercial software at this time.
There are usability issues, such as the ability to encode directly from a tape source, to perform an inverse-telecine pass, to force GOPs, etc. Many of these could find a software solution, but so far have not been implemented in software. (To be accurate, it is indeed software that is responsible for many of these advanced features. Indeed, software is the ONLY difference between a $10,000 SD-1000 and a $25,000 SD-2000 encoder. But that is software coupled with a card, so we *call* it a "hardware" encoder.)
There are some excellent software encoders on the market, though not a lot. ProCoder at $699 is one of the most outstanding, especially considering its flexibility and versatility. You can achieve encodes rivaling entry-level professional encoders (~$5,000) from it. Similar quality can be found in a few other apps, such as TMPGenc. But a cinema-quality encoder like an SD-2000 or Vizaro is not endangered because of these by a long shot. I don't think it's likely that they ever will be, because the developers don't seem interested in adding the remaining features for such a small market.
Tyler A. Hawes
Audio Intervisual Design
18 Years Integrating for Film, Television, DVD & Music Production
West Hollywood, CA: (323) 845-1155