Yes, of course. "Embedded" covers a wide range, though - one person says embedded with a wifi access point / router* or cell phone in mind, another thinks of a garage door opener or microwave. They have very different restrictions. I can see Erlang on the former.
* Sometimes it boggles my mind that my WRT54GL router has more memory, etc. than all the computers I had growing up. Then I ssh into it (running openwrt)...and my cell phone has more than all of them combined.
http://en.wikipedia.org/wiki/Erlang_%28programming_language%...
As hardware becomes cheaper and more powerful, it makes sense that it migrate to more platforms where it can run reasonably well.