There's a presumption that all hardware consumers are simply looking for a cheaper thing that does what they already have. Cheaper isn't always better when it comes to products that aren't meant for "everyone," even b2c product markets can easily be stratified.

I wouldn't say "complement hardware with software," (although in many cases, it is a good idea - but let's be honest software, like hardware, can be copied and sold at a lower margin) - but instead "complement your hardware with a thorough understanding of where you want to be in your market." You may find that there's less money trying to capture and keep customers who want the cheapest product than to find a good spot somewhere in the middle or top-end of a market.

I see a lot of poor thinking in some products, where cost is nearly the primary focus - where the hardware product is something to be thrown away when the next model comes out, because it is stripped to its barest essentials. That's a difficult position to hold - it's much better to think about where your product will need to be in a few years, and make sure that it can grow (add-ons, upgrades, etc.) without needing to be replaced. Not much different than software in that sense.

I'm not sure how one starts a hardware company these days without being a software developer (there's usually more firmware work than electronics...) - but I see it happen all of the time, people don't really care how good the firmware/software is, as long as it works, it would seem.