I'm not sure that Apple is scared yet. But I'm sure that some competition from the Android OS can only be good for both the Android people & the Apple iOS. If Apple plays it smart they will keep ahead of the game. This will also force Google to keep the Android OS more up to date. But their App Store is not as refined as Apple's.
Exactly. Apple is hardly scared by anything Android is doing. It's a fragmented market that appeals to a subset of the population, and is otherwise just a non-choice offered by the phone companies. You want Verizon? Yer getting a Droid. That will change in time.
What will not change in time is that the phone companies control their devices. You want the latest Android version? Tell it to Verizon, they control the show for your device. Open? LOL...