A software modem is a modem that relies on the computer's processor to handle some or all of its operations. They often lack the controller and/or the datapump that takes care of the modulation and demodulation of signals. This is why they are sometimes called "controllerless modems". The most popular software modems are the U.S. Robotics Winmodem and the Lucent LT Winmodem.

Software modems have become very popular because they are cheaper to produce and to buy. However, they present some important limitations:

• Since the modem uses your computer's power, you may experience difficulties if you have a slower processor or if you do not have enough RAM.
• You may experience performance degradation or the modem may disconnect if you have many applications open at the same time. For example, there are documented cases where scrolling up and down a web page have caused the software modem do disconnect.
• Software modems are dependent on the operating system. These modems will often be labeled Winmodems because they will run only on the Windows operating system. They will not work for DOS based games or on Linux.
• Most software modems load a device driver on Windows' startup, thus using precious system resources even when you are not using the modem.
• The configuration of the modem can be very complicated.

More information: 56k.com - Winmodems