So Apple are holding steady (in terms of market share) with a 15 month old phone in a massively growing market (these figures are pre the 4S). That's not bad.
Android's growth hasn't been at the expense of Apple, it's just coming out of the general growth in the market (in terms of the absolute numbers) and at the expense of the other players (in terms of the market share).
The reality of the Apple vs. Android battle at the moment is actually Apple and Android both squeezing hell out of RIM, Nokia and Microsoft.
That will change in the coming months (RIM will bottom out, Nokia and Microsoft effectively merge and will throw the kitchen sink at it) but for now it's hard to see with Apple or Android as losers.
That's possible (though I'd argue that many of them are buying at lower price points and therefore were never really potential Apple customers) but you could also argue that Android has, through raising awareness of smartphones generally, increased the overall size of the market and created more potential customers, some of whom have bought iPhones.
But the bottom line is that Apple have maintained market share and increased the absolute number of units sold. They've also done so while remaining the single largest handset manufacturer globally and in pretty much all key markets, producing the two best selling handsets over the last 12 months (despite neither launching in that time), generated more profit than all the other handset manufacturers combined and registered the consistently highest customer satisfaction and loyalty numbers.
Is Android creating pressure on Apple? Sure, but when you compare how they're performing with RIM (reduced market share, profits down), Symbian (reduced market share, profits down), Windows Mobile (reduced market share, no idea but I'm guessing profits down) then claims about what Android is doing to Apple are put in context.
Up until now, I'd argue that the comparison has been kind of apples and oranges. Being limited to one carrier has been a huge disadvantage to Apple in terms of mass adoption, and the shadow of "the next iPhone" even loomed large over the February Verizon launch. An iPhone launch across all the major carriers is huge - it's not unimaginable that people will just "buy Apple" without the carrier restrictions. In terms of market share, the next 6 months will be far more indicative than the last three years.
"Being limited to one carrier has been a huge disadvantage to Apple in terms of mass adoption"
I think this misses the boat on Apple's supply issues. Apple can't ship 50 million smartphones a quarter like android because they can't physically make 50 million iphones a quarter. Apple's integrated approach and component lockdowns can win on market share in smaller markets they create like ipad and ipod but in already established markets like smartphone and desktop they can't lock people out of making the stuff they were already making and they can't leverage the world's supply like a licensed OS does.
In the US alone: iPhones are 28% of market.. Android phones: 43%: http://blog.nielsen.com/nielsenwire/online_mobile/in-u-s-mar...
Compare to July.. 39% and 28%: http://blog.nielsen.com/nielsenwire/online_mobile/in-u-s-sma...