Intel had a challenging quarter of changing consumer preferences and weak consumer demand, as its earnings report released on Tuesday showed.

Intel had forecasted revenue of US$14.3-billion, with a margin of error of $500-million, for this quarter but it only came in at $13.5-billion — higher than the $13.03-billion reported a year ago at this time.

Analysts had expected the company to earn $14.60-billion, according to Thomson Reuters.

Intel Chief Financial Officer Stacy Smith puts the blame on weaker than expected consumer spending in the United States and Europe.

“At the beginning of the year we would have expected, along with most economists, that economic growth would start picking up and that would lead to an increase in consumer sales. Those expectations are now more muted,” Mr. Smith told the press after Intel posted its earnings.

Intel’s CEO, Paul Otellini, said during the earnings call that despite a changing consumer preference towards tablets, he has faith in the ultabook’s ability to win back some of this lost customer base hinting at $699 ultrabooks for the fall that are “more attractive” in a softer selling season.

Intel’s report comes a week after AMD reduced its outlook for second-quarter revenue because of disappointing sales in Europe and China.

Both Intel and AMD have long been criticized by investors and analysts for not having a robust mobile strategy that would allow them to effectively compete with ARM.