Intel reported its third quarter revenue on Tuesday and the figures are on the low end.

Quarterly revenue was $13.5 billion, with operating income hitting $3.8 billion and net income of $3.0 billion. Gross margin was 63.3 percent, but Intel expects it to drop to 57 percent in Q4.  The rest of Intel’s Q4 outlook is equally worrying. Intel expects its Q4 revenue will hit $13.6 billion, plus or minus 500 million.

CEO Paul Otellini said Q3 results reflected a continuing tough economic environment. "The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in Ultrabooks and phones and excited about the range of Intel-based tablets coming to market," he said.

Otellini is right, the world of computing is in the midst of a “period of breakthrough innovation,” but Intel is not at the forefront of this trend. To the contrary, Intel is on the wrong side of the fence and innovation is coming at its expense, courtesy of ARM, Apple and Google.