iWatch Release Might Replace Lagging iPad Sales For Apple

Despite its continuing ability to wow its consumers and set tech trends, analysts believe Apple has hit a low point due to a decline in sales of the iPad. The iPad business witnessed a significant dive during the fourth quarter of 2012, according to Citi's Apple analysts.

Since last year, the tablet industry witnessed a growth of 75.3%, possibly due to the overall decline in tablet prices and expansion of tablet variety—such as the introduction of many 7-inch tablets.

This introduction of these smaller tablets has greatly contributed to the decline of tablet prices. This caused Apple's profits to noticeably fall. This may lead to a drop in Apple's earnings per share growth and revenue compared to the past few years.

As of February 1, IDC reported that the iPad accounted for 43.6% of tablet shipments —down from 46.4% in the preceding quarter. Not surprisingly, this was still three times the number of tablets that Samsung sold during this same time period. Amazon came in third, with 11.5% of tablets shipped.

Apple launched the iPad mini during October of 2012, attempting to compete with the number of e-readers and paperback-sized tablets appearing on the market.

A decline in production of iPad display panels by Sharp doesn't signify that Apple's future is bleak. Many recent tech articles have speculated what this change could mean for the innovative company.

Though Citi is correct in its analysis of iPad sales, their theory of why this happened is not so solid. According to Reuters, the lower production output of the 9.7-inch displays could be due to the higher demand of the iPad mini. Since the smaller clone of the iPad with Retina Display sells at a lower price-point than its larger cousin, appealing to those on a smaller budget, this is completely plausible. Because the iPad mini is still so new, this theory cannot be confirmed until more quarters have passed.

Business Insider believes that the holiday season provides many sales to Apple's rivals due to the fact that many individuals buy cheaper tablets to give as gifts, while J.P. Morgan analyst Mark Moskowitz believes that sales were lighter in the last quarter due to a limited supply of product. Whatever the reason, Citi analysts are skeptical that a new product introduction is unlikely to restore the popularity of the large iPad and fear the implication this has on Apple's future.

However, analyst speculations may not be accounting for the new Smart Watch, given the moniker of "iWatch" by the New York Times. This gadget is rumored to be Apple's next big thing. According to Senior Research Analyst Gene Muster at PiperJaffray, this new product could be the beginning of the end of smart phones, a foray into the wearable computer market. Perhaps this lull in iPad sales is simply pointing to a shift in product focus for Apple, indicating the company's desire to expand consumer market.