Hardware will never die out because there's some people who are musicians and not mere "beat makers." Musicians buy instruments based upon two things primarily: Their tone and
the inspiration / fun factor involved with using them. VST instruments and effects sound good in their own way, but no matter how much you treat that sound it always sounds unappealing to me, at least when compared with hardware. Also, producing music on a computer is boring as hell to me, no matter what controllers I have. Even with a powerful computer and a good audio interface, there's STILL latency when playing keys or hitting pads. This is unacceptable to me and takes me out of the "fantasy world" of creating music.
I guess it really just depends on how much of a tone freak you are, what your musical pursuits are, and how much money you are willing to invest. If you've never used traditional hardware (and don't know what you're missing out on), are a strictly bedroom producer, and don't have much money... then just do everything with a computer. You can get good results. If you have fun while doing it, more power to you. However, many people who are sound connoisseurs won't settle for doing everything in a DAW. Plus, if you ever have plans on performing live, what are you going to do? Stand on stage with a laptop? Sorry, but I'd rather give myself a cinnamon oil enema than watch that. Building up a gear collection is expensive, but it's well worth it IF that is what makes sense for you and your life. I personally find the workflow of using hardware much, much more fun and interesting than working with a computer.
The kind of people who think that there's no point in using hardware are usually the same people who rarely if ever listen to music on analog formats... people who only ever listen to mp3s and streamed internet videos with their shitty earbuds or laptop speakers. I feel sorry for the younger generation, who have never really heard a properly-mastered vinyl record played on a quality sound system. It takes a dinosaur-sized shit on digital audio.