Why is Google doing Google Wave?

I have been watching Google Wave with no small amount of excitement.. if you haven’t seen or heard about it yet, I recommend you go here and watch at least the first 20 minutes of the video or here if you just want text.

What is most interesting to me is how it moves the needle forward in the email space online. The SMTP protocol was first defined in 1982, and has not changed drastically since. Google Wave is a re-envisioning of how communication on the web could be and it certainly looks like a productivity booster.

But why are Google doing it?

I dont see it adding revenue through advertising.

Are they able to track and understand user behaviour more with this protocol over email? Maybe, but even if this were the case, 3rd party providers could remove or disable this as the product is open source.

So that can’t be it.

There is potential for Google in both the consumer and business space.

On the consumer side, it is an improvement on current separate communication mechanisms along with a definite social element which could challenge Facebook or Microsoft - though if it really became a threat, Facebook (or Microsoft) could roll this technology out themselves (and finally improve Facebook’s own messaging platform). I wonder if Wave technology will add to the Opensocial platform and become the glue that brings different social networks together. With Google Wave, it could be possible to see the same photo albums in Facebook and Myspace using Wace as an underlying technology. I wonder how this would tie into Facebook’s idea of relationships and privacy.

It is in the business space that I think Google has even more potential with the product. Google Docs has not done great, and in general Google has not been a huge success in the business arena which is still Microsoft’s stronghold. Google Wave for me seems to show significant productivity increases for groups of people both locally inside one office and across multiple offices. That alone could see it adopted by companies. Once it is inside the company, the ability to edit documents inside the wave client (similar to how they currently do it with Google Docs and Gmail) would mean people could start to use web applications more and more.. and start to use Microsoft applications less and less.

Of course, Google Wave might take a significant time to be used globally like email it today. My guess is it might need to integrate with email (SMTP) in the short term. But how long before Wave is a protocol in Exchange server? Exchange server is obviously moving towards being a web service itself, and Microsoft Office has launched lightweight web versions of Office (call Office Live Workspace) . Could we see a Microsoft Exchange/Office integration using Wave protocols. It would be great if the 2 companies worked together on improving the protocol.

Why else is Google doing Google Wave?