Ultimately, MS' business in web development is tied to selling an IDE and Azure. Both have had to change to incorporate the tools people are using (JavaScript), not just the tools MS control (C#/.NET). I agree, the "Embrace, extend and extinguish" philosophy has apparently been replaced with "Embrace and hope to stay relevant".

I think they are doing a good job at handling that change. I don't personally want to be constrained to doing everything within an IDE, and I'd rather use the tools directly than have them abstracted to look like native MS tools, but that's their business model, and it is slick and works for a lot of people.