Smartphones are just a segment of the mobile phone market. Feature phones are becoming low end Android phones (hence the gains in smartphone share), but Apple's share of mobile phones is still growing. I don't think they care how many low end android phones are sold. It doesn't impact their sales (other than providing potential switchers) or the strength of the app ecosystem. Android's growing at the high end too, don't get me wrong, but much of the growth is definitely on the low end.
When the iPhone launched, Apple didn't even care about smartphone market share. Their long term goal was something like 5% of the mobile phone market. For one company, that is huge. Since they are now at more than 10% in mobile phone share, I imagine they are quite pleased.
Smartphone share is not that important of a metric as people seem to think (again mobile matters). The size of the smartphone market is growing dramatically year over year, so comparing percentages from year to year is pointless. Sure Androids gobbling up a ton of low end feature phone converters, but what happens when that stops? Either due to running out of feature phone users to convert, or WP8 gaining more traction. Where does the new growth happen? Apple's been converting a lot of those low end Android users to iPhone users, so I don't think they are too worried about their long term growth prospects.
Looking at smartphone share alone is like walking through the woods at night with a flashlight. There's a lot you don't see. Apple's goal isn't to beat the 100s of Android manufacturers out there in sales volume, like everyone seems to think. How on Earth would that be a reasonable goal? Production and licencing are two very different business models. Android needs the massive market share, not Apple. Apple's business model isn't like that, and never was. They just want to make the best phones they can and sell a lot of them, and yes, as far as phone models go, the 5s is the top selling phone out there.