Marx thought the state would wither away once socialism had gradually transformed society until a point where there were no more capitalists and thus no more class distinctions.
In other words: At the end of a long journey where he first expect capitalism to engage in a long sequence of boom-bust cycles, eventually have fully globalised to an extent where there are no new markets to expand into, and proceeded to compete itself into the ground by cutting margins until the only viable way of continued cost reduction is to push down total salary costs, and which he expected would culminate in a revolution once people were desperate enough, following by a long transition phase.
If anything the idea that "capitalism has reduced the state until its chief functions are protecting the rich and policing the poor" could almost be a quote from Marx as it is pretty much exactly the Marxist view of the state:
Marx explicitly saw the state as existing in its current form as a tool for the ruling class to use to oppress the rest. His phrase "dictatorship of the proletariat" is well known because it's a favorite to use because people think it refers to Soviet style oppression, but he also used the phrase "dictatorship of the bourgeoisie" to refer to capitalist states - irrespective of level of oppression. The terms refers to which class is in control, not the means of control or the level of individual freedom, and highlights the idea of the state-as-oppressor:
The dictatorship of the proletariat as envisioned by Marx was the working class taking control and oppressing the capitalists, and gradually transforming society and pushing said capitalists into the working class.
By doing so, the capitalist would become part of the ruling class again, as a worker, and the capitalist class would eventually cease to exist.
That end-state would be the start of communism: Once there's nobody who is able to work who is living off the work of others, and no class differences.
Marx argued that if you reach that point, the state-as-oppressor has no function left that can not be served by purely administrative organs subordinate to more egalitarian power structures such as communes, and then it would wither away.
As such, the quote you picked from the article is trying to set current capitalism up as an example of how Marx is wrong, while instead succeeding in making an arguments that most Marxist would agree with.