I would think so. Early on applets were where it was at, man. Now books like "Head First Java" (an excellent way to learn Java, by the way) don't even discuss them. There were a lot of problems with applets, some of them political, that probably held them back.
I know that Yahoo! still uses applets for their games, so they aren't dead technology, but clearly they didn't live up to Sun's hype and the current buzz is all centered on other things.
There was another factor hinted at in the original statement: Not only has the applet shriveled a little in importance, but other Java technologies have outpaced the applet in popularity and functionality. Applets still have their uses, but Java has found lots more ways to be useful.
Give a man a fish, he'll eat for one day. Teach a man to fish, he'll drink all your beer.
Cheers, Jeff (SCJP 1.4, SCJD in progress, if you can call that progress...)
Applets are still used. Their role has shifted. They are useful for animation, but it's usually faster to develop Flash. The biggest problem with Applets is that you are usually stuck writing for the 1.1 JRE because you don't know what rev of Java exists on the client machine.
Applets were very popular initially because they were the first way to provide a rich client experience through a browser in any kind of cross-platform manner. The majority of Web Application programming however has shifted it's focus to Server-based technologies like servlets, JSP & EJB's.