Not the end of the world
Definitely not a fan of Apple here (my experience with their software - iTunes, QuickTime, Safari - has left me baffled as to why people c like their stuff) and I've always thought that their claims of innovation were massively inflated. However, their form factor is second to none and I believe that this is the basis of their success. Tablets have been around for ages but Apple waited until the technology allowed them to put it in a great-looking package. Same with the touch screen phone. And I loved my iPod Classic (and still do).
So the iWatch is just wrong in my opinion. It's clunky and particularly ugly compared to standard mechanical watches that FL for the same price. There are no killer features and it has to be recharged daily. In my opinion Apple simply haven't waited until technology can match it's ambitions.
I doubt Apple are too worried. One disappointing quarter does not equal a trend. And every other company in the world would be delighted with a quarter as 'bad' as this one. They have more money than Croessus, a rabidly loyal customer base and plenty of time to come up with their next 'magical' device.