Nah, I don't buy it. I'm pretty sure they hold no illusions of being able to extinguish open source, as I don't believe they're quite that foolishly optimistic.
This is nothing more than Microsoft acknowledging the realities of today's market in which they're no longer the sole dominating platform. They're turning their aircraft-carrier-sized ship in a new direction in an attempt to stay relevant in this more diverse ecosystem. Frankly, I think moving to open source is less important than Microsoft turning into a true multi-platform company, in which it's actually developing for platforms other than Microsoft Windows with first-line applications.
Going open-source is just a means to an end. I don't think you should read much more than that, either positively or negatively in regards to their stance on open source. They're just moving their technologies (like server-side .NET APIs) to other platforms, which will allow current MS developers to easily develop multi-platform code without having to move away from their familiar development environments - meaning Windows + Visual Studio. Visual Studio will soon be able to target Android / iOS and use the LLVM compiler, which would be unthinkable for Microsoft of just a few years ago. This is critical for their own future internal development strategy. They want their own development teams as well as other Windows developers to be able to quickly and easily create applications for different targets using a common set of tools and technologies.
In short, they're broadening their focus from an exclusive Windows stack into more generalized software development and hosting that includes multiple platforms. Linux servers, Android, and iOS are not going away, so why not make money selling software for them? This keeps their business clients happy, as it means their mobile apps don't need to run on Windows phones, which no one really wants, while they can keep using the same Windows OS and software on the PC that they're already familiar with and currently using.
If you want to look at it more cynically, you could say that Microsoft is attempting to keep Windows relevant in a post-PC world by ensuring it can more easily interop with other platforms like Linux, Android, and iOS. The best way for them to do this is to allow Windows PC developers to use their existing tools and technologies to target those platforms.