Judging by the number of modular synths, drum machines, effect units and other lovely knob and button-laden things at this year's NAMM show, it's clear that hardware music technology isn't going anywhere. Producing music entirely "in the box" (i.e. with a computer in a DAW environment) is now common and widely accepted. People 20 or 30 years ago would have been amazed that you can do all that stuff on a computer - let alone a personal computer. Yet there are now more modular synth manufacturers around today than there were in the 60s and 70s, when names like Moog, Arp and Buchla were at the cutting edge. So why would more manufacturers be making hardware when you can just do everything on a computer now? These may be contributing factors:
1) Hardware is cheaper and easier to manufacture than ever before which makes owning gear nowadays comparatively far more affordable than in the past (owning a modular synth in the late 60s was akin to buying a luxury car).
2) Some people prefer the tactile "feel" of an instrument. Even "in-the-box" productions require outboard MIDI controllers, speakers etc. to interface with the people making the productions. Computers can't read our minds. Yet......
3) While the software emulations of things like Minimoogs and other classic synths are getting quite good, there is a lot of variation in sound and feel with the real Minis out there. They were made for a decade. Therefore, a 1971 Mini won't behave exactly like on made in 1980. Individual instrument quirks can be important to musicians - analogous to a guitar player who really likes the feel of the neck or the tone on a particular guitar.
4) Inspiration. With everything conveniently at your fingertips it's all too easy to fire up Massive and start cruising through the list of presets until you find something that's close-ish to what you want. Then you mess around with parameters trying to make the sound more like what you hear in your head. It's not any easier making sounds from scratch on a hardware synth - in fact it's usually harder. But eventually one gets sick of all the presets and wants the inspiration that may come more naturally on and instrument with limitation - but has lots of character. It seems counter intuitive, but sometimes we can be the most creative by limiting our tools of expression.
5) Sound. Kind of stating the obvious here, but people wouldn't go through all this hassle if the sounds weren't worth it.
So how does one use a hardware instrument within DAWs like Ableton? It depends on what the instrument is, how old it is, and how you intend on fitting it into your productions. Of course the most obvious way to incorporate a hardware is to just record the audio into Ableton. Sometimes there's something to be said for a sloppy, un-quantized synth line played by hand and recorded direct. If it's an old synth that has no means of MIDI or CV control recording the audio output may be your only option. If it's a pre-MIDI drum machine there might not be any way to "clock" or control its tempo externally. If that's the case its probably best to sample a pattern and loop it. Ableton's "Slice To MIDI" feature makes it easy to break down cheesy preset drum machine patterns into their constituent parts and re-sequence them in the box. If it's a more modern machine with MIDI you can opt to tempo or "MIDI clock sync" it. That way you still get the "feel" of the drum machine's own sequencer, just running in sync with Ableton. MIDI-equipped machines usually have the ability to trigger the individual sounds using MIDI notes, so patterns can be sequenced directly from the computer that way as well. There are lots of possibilities. Below is an example of a setup where the computer is controlling a Roland TR-8 through USB. The MIDI out of the TR-8 is going into the MIDI in on the Oberheim DX, which is a much older machine from the 80s and only has MIDI. The DX is being "slaved" by the TR-8 (they could both be used that way without a computer). However in this instance, they are both slaved by the computer which controls the master tempo and start/stop via USB. Sync has to be enabled in Ableton's MIDI preferences for this to work properly.