It's basically this, yes. Blue LEDs were such a game-changer that the inventor won a Nobel prize for it. When they became cheap enough to use in consumer electronics, manufacturers went absolutely nuts and put them in everything as a sort of whiz-bang look-what-we-can-do thing. But since everyone did that, they stopped feeling distinctive almost immediately. The only designers still using them for indicators are the ones who can't tell when a fad is over. They're still very important technology for LED light bulbs; white LEDs are blue LEDs with a yellow phosphor.

ETA: I'll add that it takes real time, effort, and crucially taste to get an LED indicator to not be a retina-searing nuisance. You have to be willing to devote time to getting it right, and for someone just trying to pump out cheap units at volume, that's not an easy sell.