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I think the real deciding factor is government policy. So far they have favored software and services companies, letting them eat the lunch of the hardware producers.

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The reality is that software is valued like it is hardware, but has a teeny fraction of the input costs and running costs. The government didn't have to do anything, investors naturally ran to the software "copy+paste" money printer. Build it once with only labor costs and then copy for nothing infinite times.

To build a $100M software company you need 5 capable friends and a cloud account. To build a $100M hardware company you need $500M.

The government heavily revised and reinterpreted patent law many times in favor of software companies starting in the 80s. Otherwise hardware companies would have the only real moat since, as you say, software is relatively cheap and fast to produce.

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