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Assessing Affy’s Affairs

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By Jennifer Friedlin

 

Affymetrix is undoubtedly the market leader in the micro- array field, having created and built an entire sector around the idea of putting DNA on chips. But a recent spate of bad news from Affymetrix and indications that a slew of companies are gearing up to launch competitive products begs the question of whether Affy’s position is as secure as it is legendary.

Recently, Affy announced that it was reducing its second-quarter revenue forecast from $56 million to between $44 million and $50 million, citing reasons that may reflect a fundamental fault line in its business.

For one, Affymetrix attributed the lower revenue outlook to a drop in demand for its spotted array instrumentation, indicating that the do-it-yourself market may not be as big as the company anticipated. Fair enough —Affy never said that those instruments would be its bread and butter.

But what Affy hasn’t discussed is how it’s going to sustain revenue growth given its recent mouse-chip debacle just as competition is gearing up from the likes of Incyte, Corning, and Motorola, as well as companies making lower-density, disease-specific chips and microarrays.

In interviews with BioArray News, Genome Technology’s sister publication, users of the U74 murine chips complained that the one-for-one replacement Affy offered did not compensate for the time and reagents wasted due to the faulty chips. At a time when a number of new players are planning to enter the market, Affy might want to come up with the goods to satisfy disgruntled customers.

In addition, Affy ought to outline its plans for developing new products and explain how it plans to go head-to-head with the increasing number of players in the space.

At a time of uncertainty in the microarray marketplace, one thing is certain: Just because Affy has dominated its market of one until now does not necessarily mean it will stay ahead forever.

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