External HDD with built-in encryption scheme: Better than TC or DC?

Alternative title: Hardware vs. software based encryption: Which is better?

Example: I bought a 2 TB Western Digital USB 3.0 external HDD (My Book Essential) because it was cheap (150 €). The drive also comes with automatic backup/recovery and encryption software, but I do not plan to install their soft as it has received universal condemnation. The only feature I enabled was the encryption (password requirement to access the drive).

Here's how it works: When you plug the drive into a computer, it detects (mounts) a small vitaul cd with unlock.exe and reformat.exe on it. Running unlock.exe launches the password dialog, you type the correct password, and the unlocked drive appears as a new drive mounted to the next free drive later or a previously fixed drive letter. I may set the unlock function to autorun when this device is first connected to my computers. Anyway, so far this seems straight forward.

Question: What are the benefits and disadvantages of using Western Digital's or other storage device manufacturer's built-in hardware based encryption features instead of reformatting the whole drive with either TrueCrypt or DiskCrypt, and then using those software-based encryption solutions?

 

It will be faster, but it's also done without any review by any experts, which means that no one knows if it's doing its job. No one knows if it is even encrypting correctly. It could have a backdoor. It could have coding errors which makes it ineffective. That's why it's a better idea to use an open-source software program like Truecrypt and then get an AES-NI capable processor for the hardware acceleration.