In 2007 Steve Jobs announced the iPhone and with it his reasoning for going with an on-screen keyboard instead of a physical one and these very much apply with buttons as well
Stays there no matter if you need it or not
Do you really need the buttons there all of the time? With on screen buttons they disappear when you don't need them like when you're watching a video and appear when you do.
With physical ones they stay there taking up physical space which they could have got rid of or used for something else
They are the same no matter what application you are in
Since Android 4.0 when you open a legacy application it shows the menu button in the far right of the navigation menu, in the future I can see the same happening with the back button where it will only show it when there is actually somewhere to go back to (like on a web browser)
With Physical buttons those are the same no matter what
Once its out there it's impossible to change or update
This reminds me of the HTC One X and One S, they lacked a physical menu button and because of that they were bashed a lot and because of that they had to add an on screen one through a software update.
Now granted other manufacturers can do the same when they are missing a button but surely it will be easier to have them all software based and then can remove them when they are not needed anymore
As well as this what happens if a button breaks? With Physical buttons someone would have to pay money to repair it whether it is the manufacturer or the customer but with on screen buttons most are fixed through a factory reset
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Hopefully HTC doesn't follow suite and actually takes a page out of Sony, Google and Motorola's Books
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