Why is the Hardware keeps on improving rapidly, while software not? What is fundamentally different?

Hardware development reached a higher maturity level than software did. Hardware was always a step ahead of software and this can easily be seen throughout recent history. Examples such as multi-touch technology are straight forward. By nature, software follows hardware, but, as explained already, software takes more time to develop, encounters difficulties in maturity, standards and continuity, whereas hardware does not encounter such problems. Also, hardware is physical, opposing the virtual nature of software, and humans still value something physical more. It is more likely that someone spends money on buying hardware than software, often acquiring the required software through other means. Therefore in general hardware presents a higher business success and hence hardware R&D is better supported by financial resources than software.