From my perspective Apple makes almost all their iPhone money from the software. The phones are lovely hardware, but look at the original iPhone and 3GS. They were plastic soap bars. It didn't matter because the software was phenominal. I think their problems with iOS are crucial. If they let the quality of their software slip for too long they'll be in serious trouble. I still think they've got maybe 2 years lead over the competition in their overall OS, services and applications portfolio, but that's less of a lead than they had 2 years ago.