As many of you know, I work for Big Software Company. Embrace/Extend/Extinguish is something we do. A lot. As in I have watched them kill well over 20 products in 15 years. Probably closer to 50. This strategy is real and software companies absolutely do deploy it, all the time.
There's a bunch of good articles out there on Embrace/Extend/Extinguish, so if you're curious, I encourage you to google it. If you want the tl;dr version, it's in the next post.