Oh, yeah, Intel are still in the game. They're a massive company and will continue to be. I just think there is going to be a major shakeup as a result of Ryzen. Intel not only have to defend against Ryzen in the desktop sector but also in the highly lucrative datacenter sector which likely AMD will be targeting next. That's a bigger deal for Intel as far as I can tell.
They might drop their prices, yeah, but I think they'll do everything they can to avoid doing so. The new Kaby-Lake-X CPU's might be that scapegoat. They can reduce the prices of their current CPU's but keep their new 7640K and 7740K at the same price, hoping to grab a few hardcore fanbo... I mean, customers, that way. Just kidding.

That would annoy so many early Kaby Lake adopters, though.
On the other hand, Coffee Lake could be an absolute beast. Imagine the IPC's and clock speeds of the 7700K with an additional two cores and hyper-threading on both the i5 and i7. Even with the same pricing that would be amazing especially if they manage to consolidate their chipset design ideas and can stick to one for a few years.