Nope. You don't sell what consumers don't want. Tablets have spoiled consumers as low cost computing devices - even high end tablets are what, 400-500$? With other 7 inch tablets costing 150-whatever. Compared to high end laptops costing way way more. Yes, I know ultrabooks are more capable, but for the average joe that doesn't need the power and merely wants media consumption, the tablet is their choice and is a fine choice for their needs. You may be right, consumers may in fact be happy with this performance. OTOH, they may find the performance marginal at best now and totally frustrating in a few years as software and internet use becomes more demanding.
The market drives what is produced, not the other way around. Like it or not those cheap tablets and cheap chromebooks are eating into laptop sales to an extent that intel has to address that market. Speaking of which, their answer was making chips that can be used in those very same tablets and chromebooks. And chromebooks sell by the boatloads, don't kid yourself, consumers that don't need the added horsepower of a full laptop love the chromebooks. So eitehr intel can sit by and not get those sales (and give them to other ARM SOCs) or they can try to make a chip to address that low cost segment.
This is not intel's doing. The market drives what is produced, period. That said, there is still a healthy market for high performance portables and intel still sells those chips, and there will always be a vast difference between the capabilities of a cheese chromebook versus a full fledged ultrabook. And for those that need it, it's there. It's all up to the consumer really.
Some consumers need the computing power of an ultrabook. They get a core architecture chip. For those that don't need the power, they get something less such as an ARM SOC or Bay Trail based chromebook. We can argue about intel's success in this respect all day long but this is a market that intel needs to address, and they are. In the meantime, for high performance computing devices there is no one that can touch intel, and they get nearly 100% of that business. Ultrabooks,macbooks, and high end laptops are still selling very well so intel may not be making a ton of money on the low end but the high end more than makes up for it. These consumers (high end vs low end computing devices) don't overlap, they buy based on what their computing needs are, pretty much.