The earliest MP3 players required hardware decoders, but it didn't take long for these devices to get faster CPUs that could do the decoding. This in turn enabled firmware updates (either official or unofficial, e.g. rockbox) to bring in support for new audio formats.
An updateable firmware does not necessitate a software decoder. Hardware decoders can (and do) have their own firmware, and can support additional formats if they were designed with that in mind.
Also you can have a hardware decoded MP3 path, and a software decoded OGG path, for example. They can coexist.
Most real hardware wasn't designed to be on the market long enough for any of this to come to pass, though, and you're probably 100% correct.
