It's usually great for a company like biochip maker Affymetrix (Nasdaq: AFFX) to be the front-runner in a new industry. The ahead-of-the-game status provides a monopoly early on and a moat as things develop. But when the industry shifts, it means the company has a lot of inertia going in the wrong direction.

Affymetrix lowered its 2008 guidance last week, and yesterday it gave a little more clarity as to why the performance was poor this quarter. Excluding a timing issue that pushed $3 million of contract research into the second quarter, most of the remaining miss came from pharmaceutical companies doing less research using its gene expression chips. Illumina (Nasdaq: ILMN) derives a lower percentage of its revenue from gene expression chips, which explains how it was able to do so well this quarter.

The problem is that "pharmaceutical companies are doing less target identification," and that's the type of research that uses the expression chips. It's possible that some of the sales will come back after pharmaceutical companies like Wyeth (NYSE: WYE) and Schering-Plough (NYSE: SGP) finish their reorganizations, but in general it looks like the market for gene expression is just about saturated.

Affymetrix's newer genotyping chips, on the other hand, saw strong 24% year-over-year growth in the quarter. Affymetrix and Illumina don't see sales of these chips slowing down anytime soon; in fact, they'll likely grow faster as the companies expand into the clinical setting.

That's one area where Affymetrix is definitely ahead of Illumina. Laboratory Corp. of America (NYSE: LH) is already using Affymetrix's chips to perform cytogenetic tests to detect duplication and deletions associated with diseases such as Down syndrome. It's also developing companion tests for drugs in clinical development, but I think it'll take a few more years for the growth in this area to really pick up.

Affymetrix is guiding for 8%-13% growth in revenue this year, excluding a one-time gain from a patent settlement. Year-over-year growth could get worse before it gets better, but investors who can hold on through Affymetrix's adjustment to more clinical revenue might be getting the company for a steal at these prices.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Laboratory Corp. of America is a Motley Fool Stock Advisor pick. The Fool has a disclosure policy.