For context, read this first:
1. Netflix has streaming quality equal to or better than Blockbuster or my dedicated hardware cable box. No software codec can make the claim that their quality is better than any hardware codec currently on the market. None. Hell, Netflix can stream at 1080p, I can't get 720p out of any software codec. It's not an apples to oranges comparison. A DVD collection to streaming Pandora may be a better one.
2. Lifesize is already changing their model. They literally HID their codecs in their booth at Infocomm. I had to ask someone in their booth if they were still selling codecs.
3. In talking to end corporate users (Fortune 500 types), none of them that I know of are switching to soft codecs. Some of them are opting for a hybrid deployment but refreshes always involve the latest codec from Polycom or Cisco. Every now and then someone brings up that they 'use' Lync, but nearly everyone hates the experience.
4. "The quality and security gaps are being closed at a fraction of the cost, so the niche for hard codecs is shrinking." While I can't speak to security, the thought that the quality gap is closing is simply not true. Nearly 10 out of every 10 software calls I am on has an issue with audio, usually from someone not using a headset which are never used with a hardware codec. Half of the calls have video problems or audio to video sync problems. I've been testing software codecs for years now and the experience is about the same now as it was back then. The problems are the same as well.
That being said, I've not had the opportunity to experience a software codec over a private network, so I am obviously skewed in my opinion. But the fact that these products are marketed to be used in the 'cloud' - ahem - internet makes me think my experience and opinion is valid.