A traditional hardware modem really is two major parts: the modulator/demodulator (hence "modem") which translates the buzzes and hisses to bits and vice versa, and the "personality": the hardware and software that lets you type AT commands, does error correction and so on.
A "winmodem" moves one or both of those parts to Windows (or Linux, of course) software. The advantages can be size and cost, and of course it's trivial to add new features or fix bugs. The disadvantage is that a modem has to do quite a bit of work, which a winmodem hands off to your CPU.
Key words to look for: HSP (Host Signal Processor), "Controllerless", and of course "Windows Only" (though Linux may still support it regardless).
Although it is certainly true that modern CPU's spend more time loafing than anything else, I think I still prefer a hardware modem - not that I have much use for modems at all anymore.
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More Articles by Tony Lawrence © 2011-07-05 Tony Lawrence
People who are more than casually interested in computers should have at least some idea of what the underlying hardware is like. Otherwise the programs they write will be pretty weird. (Donald Knuth)