This feels more like an internal turf war inside Microsoft. The general open source strategy with .NET Core and VS Code has been running long enough that I don't think it's just a smoke screen. But there's probably plenty of different interests inside Microsoft that are at least partially in conflict. The Azure side probably doesn't care about selling Visual Studio, but they care about developer mindshare and reputat…
There are people on record that it was the Azure division head Scott Guthrie who gave permission to open source ASP.NET Core (which at the time was part of Azure). Later the asp.net team merged with the .net team and brought the open sourcing with them. VS has no place anymore. The velocity and mindshare is with VS Code. VS with its visual designers had its place .. but desktop is dead and Xamarin competes with frame…
There is a place for a featureful IDE with robustly implemented build, debug, and package management capabilities working out of the box with multiple languages and entrenched technologies.
I do very much like VSC and use it all the time for anything involving text, markdown, cross-platform C++, javascript, and even rust...but Visual Studio is as much of the Windows or .NET dev's toolkit as Xcode is a part of a dev in the Apple ecosystem.
VSCode is great. However, there is plenty of space for VS: it is also very strong, and has a long history of deep and extensive integration into very mature technologies. VS is still getting better year over year and while I see VSCode as competitive in some spaces, it is no contest in others. If VSCode is to replace VS, it has a very long tail of issues to address, the resolution of which would probably raise both boats anyways.