Google apparently has two strategies in mind. According to the report, Google will simply stop developing new Android versions as fast as it has over the last year. Four separate versions--1.5, 1.6, 2.0, and 2.1--have been released in less than a year as part of Google's mad rush to improve Android, and it sounds like the company is more satisfied with its recent progress.
The second part of the plan reflects that maturity: Google is supposedly shifting development away from Android's core to focus on applications and also plans to put more separation between those applications and the core operating system. That means that new applications that arrive along with new operating-system releases could also be downloaded for older phones through the Android Market without having to pass through the handset maker or carrier's approval process.