DISQUS

I think you're right on. First if I was a customer, I'd be pissed about my $600. More importantly, I think they're destroying the value of the market (or accelerating the evolution of the market). But isn't the $1000 genome a selfish and naive argument made by academics and VCs? Focus focus focus on the customer. In the real world, the genome will be free and you'll be charged a subscription for value-add services - because this is the only thing a customer is willing to pay for. Which means this whole industry (just like in IT - think Dell) is in a race to commoditization and doesn't know it yet.

Being essentially backed by google - if 23andme is willing to use the nuclear option of basically giving it away, everyone else will soon fade away (because organic growth is unsustainable), unless they have deep pockets - but then what investor would work against google's deep pockets.

So in 3-5 years, this is what we have:
There are 1-3 big players left. Their business model is to offer lots of value added services. Their founders are replaced with real managers who don't make naive mistakes. 23andme stuggles as people become increasingly suspicious of google. No smart VC will get near this area including the vastly overvalued $1000 genome platform startups (b/c it's a race to commoditization). Everybody is still struggling to find customers - mostly because physicians resist the idea because they are (by law) disintermediated in the sale, and nobody offers clinically validated/FDA approvable services (it will take 10-15 years before we get there) and the physicians don't want to deal with that complexity/liability of genomic medicine anyways. Not to mention payors will refuse to play along.

So the business model evolves to a few flavors, such as (1) giving the service away, and $10-$20 per month subscription to hold your data and give updates banged into the system by chinese post-docs or grad students. (2) wiki style platform to which open source informatic widgets allow you to slice and dice your own data set (that is hosted for $10 per year by some patient advocacy nonprofit) and anonymized so that academics can do research on it for free and pharma pays a small use fee. (3) myspace etc. develops a service.