This may not be the first time we've heard complaints about Firefox getting a bit bigger than it should be and having bugs here and there, the first time a project has moved from major releases to incremental changes, or even the first time that Firefox has been caught between two other popular browsers like this... but it's still a brilliant insight because... erm... magic!
The more frequent installments may have been a problem for Microsoft, but that's hardly condemnation of the shorter, smaller approach. The admission he claims that they're making is clear and obvious bullshit - just compare Slack and Gentoo if you really want to believe that such an admission makes sense - and Firefox has survived major code revisions before. Google still contributes to Firefox, KDE bounced back from a clunky, unpopular release and is still more than popular enough to have its own 'rebranding' (or even be the default DE) of major distros (and worst-case scenario KDE 3.5 is still widely available), and Firefox has too large a community of users *and* developers who will continue making the kinds of extensions and add-ons that made Firefox work so well. The biggest problem I can see is that more features are being added to the base instead of being left as addons, which were one of Firefox's best features (and a great way to take advantage of the free software community), and I don't doubt that there's still time to repent.
Is this the first time that Firefox has been 'between a rock and a hard place'? No, because right now it's between a fossilized bison and a small child. Is it true that 'the writing has been on the wall for some time now'? Yes, but what was left out was that the writing was in fecal matter on a gas station bathroom wall - note that this same author who has bashed free software for not coming from Redmond, Apple products for not coming from Redmond, and... well, you get the picture.
Long story short... the writer sucks (just try a web search, and good luck with the sudden increase in your blood pressure), the sky isn't falling, Firefox isn't dying, take what you read a little more carefully, and it'll be a long time before Chrome is in a position to kill Firefox - a position that won't likely be taken unless Mozilla turns evil and starts running around Mountain View with fucking lightsabers and battle droids. Move along, now.
Jeff