Time for iWatch? Slumping iPad opens the door for the next big thing

iPad sales
iPad sales with a little too much air

Today's earning report out of Cupertino suggests that the iPhone is still increasingly popular among consumers and that declining iPad sales make room for the next big thing from Apple.

Apple managed to sell 43.7 million iPhones and 16.3 million iPads in the second fiscal quarter, beating Wall Street estimates for iPhone sales of 37.7 million.

The iPhone 5S certainly helped prop up its year-over-year revenue boost. Apple CEO Tim Cook said during an earnings call that each of its three iPhones were better than their predecessors.

Which iOS handset the reportedly struggling iPhone 5C was competing against wasn't spelled out during the call.

iPad Air sales a little too light?

Apple's tablet sales had a bit of a drop off compared to both expectations and last year's earnings in the same period, even with the redesigned iPad Air in tow.

Apple sold 16.35 million total iPads in the second fiscal quarter when the markets were looking for 19.7 million iOS tablet sales.

During the call, Cook blamed the declining iPad sales on an inventory change, but said he "remained bullish on the iPad."

He also tried to put the miss in perspective; the iPad remains Apple's fastest growing product and it was an instant hit among its three demographics of consumer, business and education.

iWatch could be up Apple's sleeve

Cook said "the key thing is for us to stay focused," but that Apple is comfortable in expanding the number of products and services it's working on.

"We've got things that we're working on that I'm proud of and excited about," Cook said, noting that he wasn't ready to pull back the curtain on any announcement quite yet.

This immediately brings to mind the rumored iWatch that Apple is said to be developing as a merger of a smartwatch and fitness band.

The unconfirmed iWatch could rival the already-released Samsung's Gear 2 and Gear Fit and the summer-bound Moto 360 running Google's Android Wear operating system.

These release dates don't matter much to Apple. While never mentioning smartwatches specifically, Cook noted that Apple has historically never minded being late to the fray.

Apple wasn't the first to release a tablet, phone or MP3 player, he pointed out. "It means more to us to get it right than do it first."

Matt Swider