I'm not so sure it's a response to AMD as much as it is a response of the collective results of third party benchmarks of the Kaby Lake processors being "If you have Skylake, don't upgrade, if you have Haswell or Broadwell, there is little reason to upgrade, if you have Ivy Bridge, there is still little reason to upgrade." The 7700k is only 33% faster than the 5 year old 3770K (the 7700k is 700mhz, or about 15%, faster in clock speed, however) and still holds its own in games quite easily, as it is still 30% faster than the FX-8350.
Intel switching from Netburst to Core 2 then to i3/i5/i7 were their last real innovative move, ever since then it's been small performance increases on the Tick and increases in efficiency on the Tock, FOR 10 YEARS. I am not kidding, look at it! In 10 years Intel has only been able to improve performance by 87% (and that is with a 1.2ghz clock advantage to the 7700, so clock for clock you're looking at 70-75%)
AMD, on the other hand, in 5 years, has not really increased performance any as the market did not move to the server, HPC, and console ideology of "multiple small cores, multiple threads, efficient and fast", but stuck with Intel's "BIG CORE! BIG SPEED! BETTER!" philosophy.
I don't count the 9590 because it shouldn't exist. It sucks power like crazy, throws off more heat than Donald Trump, and only provides a very marginal performance improvement over the 8350
Ryzen will give AMD a massive performance boost yes, but it's only because they've had a massive performance detriment over the last decade. Heck, it took AMD 5 years to counter the i7-950
If Intel is scared of anything, it's the same thing nVidia was scared of when AMD released the HD 4870. nVidia had to assassinate their prices overnight and go back to doing more than rebadging the same card for 5 years. Behind closed doors Intel knows that AMD will never have this kind of performance leap again (part of it is the fact that AMD is skipping a few manufacturing nodes and going to 14nm FinFET from 32nm SOI), and that they've gotta gear up for thinner margins due to a price war, but they still have an advantage for 7nm, and they know the first to manufacture at 7nm will enjoy a nice lead for a while the same way Samsung did with its 3DNAND, but that's years off, and both companies should move to 10nm at about the same time.
Either way, the customer SHOULD win for the first time in a decade.
I saw that the other day, and two things came to mind: How rich, spoiled, and privileged are you that you scoff at $22 an hour, I'd fly a rainbow flag and change my lifestyle for that kind of money (well, maybe not for $22, but still), and that Intel doesn't know what it's going to do with it, which makes it sound more like a response to Trump's challenge to create American jobs rather than an actual job plan.
I also read that the Intel release will have the higher clock speeds to stay on top performance wise (in their estimation), but they will still be over 110 TDP.