Google doesn't make updates and they don't make hardware it is up to chip manufacturers and OEMs/ODMS to optimize what ever version of Android they are using. The handset makers makes the updates they develop Android for hardware so if anything they do development. Anyways lets imagine this Google limits hardware and software like they did with Honeycomb where they locked down the source code and allowed only basic customizations, one screen size, one aspect ratio, and same processor, look at what happened none of the products were competitive and nothing was priced competitively either. To lesser degree the same has happened Windows Phone 7 with its hardware and software limitations.
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Doesn't matter the device his point was that it is always necessary to have the latest and greatest.