The threat from Android to iPhone probably looks bigger than it actually is. Per study that just came out [1], iPhone users are much more loyal than Android users: 24% of Android users plan to switch vs. 9% of iPhone users. If this persists, Android users will over time "leak over" to iPhone.
I, personally, am not that pleased with my Android phone. The present trend might be in Apple's favor, but, presumably, Apple will have to keep executing well to maintain that momentum.
[1] http://www.theguardian.com/technology/2013/aug/08/iphone-and...