The Good News Behind the Zynga IPO And What it Says About the New Economy

With headlines featuring words like fizzle and slump, do we conclude from Friday’s “disappointing” IPO of Zynga [ZNGA:NASDAQ] that social media is a bubble that’s run its course?  Hardly.  We are witnessing the inverse: the real beginning.

By any reasonable business standard, especially in these dismal economic times, it is remarkable that a four-year old game company like Zynga can raise $1 billion, establishing a $9 billion market valuation.  It illustrates that something fundamental, and big, lies beneath.

What Zynga and similar companies emblemize is that the world has finally entered a structural revolution unlike anything since the dawn of computing.   We are now in a “new economy” based on a new industrial base that has the scale, performance, cost metrics and growth potential to be America’s engine of prosperity for decades.  It is a broad, deep and rapidly expanding industrial infrastructure anchored in what has come to be (mis)labeled “tech,” in all its various manifestations.

Some observers might think this sounds like a reprise of the 1990s buzz about America entering a “new economy.”  That idea was tarnished by the tech market bust of 2000 – and by the fact that a new economy never quite materialized.  Turns out that baby boomer pundits were prematurely excited about things like e-mail and e-commerce made possible by the advent of the commercial Internet.

But you can perhaps excuse the boomers.   These folks came of age in the ‘60s when touch-tone land-line phones and punch-cards for the campus IBM mainframe were big deals.  When the 1990s brought a revolutionary computer like the Mac Classic (pictured), and the radical Motorola StarTAC cellphone, a swaggering symbol back then, and the Internet, well schazam, boomers were all agog.  The new economy label was, however, premature.

read more at http://www.forbes.com/sites/markpmills/2011/12/18/the-good-news-behind-t...
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