Internet

Will Google's Wave Replace E-Mail--and Facebook?


Google has big plans for Google Wave, its new online communication service—and they won't all come from Google.

The Web search giant is hoping that software developers far and wide will create tools that work in conjunction with Wave, making an already multifaceted service even more useful. Google (GOOG) is even likely to let programmers sell their applications through an online bazaar akin to Apple's App Store, the online marketplace for games and other applications designed for the iPhone. "We'll almost certainly build a store," Lars Rasmussen, the Google software engineering manager who directs the 60-person team in Sydney, Australia, that created Wave, told BusinessWeek.com. "So many developers have asked us to build a marketplace—and we might do a revenue-sharing arrangement."

Combining instant messaging, e-mail, and real-time collaboration, Wave is an early form of so-called real-time communication designed to make it easier for people to work together or interact socially over the Internet. Google started letting developers tinker with Wave at midyear and then introduced the tool on a trial basis to about 100,000 invited users starting on Sept. 30. Invitations were such a hot commodity that they were being sold on eBay (EBAY). For Google the hope is that Wave, once it's more widely available, will replace competing communications services such as e-mail, instant messaging, and possibly even social networks such as Facebook.

If Wave takes off, applications created by outside developers could make it more useful, and an app store would give those programmers and their financial backers a share in Wave's success. Already, independent software developers have built and tested Wave applications that handle such tasks as teleconferencing, videoconferencing, and multiplayer gaming.

Wave wouldn't be Google's first stab at an app store. Google runs Android Market, which sells third-party software for phones such as the T-Mobile myTouch 3G and shares 70% of those sales with developers, keeping the rest. Android Market offers about 10,000 apps, compared with the more successful Apple (AAPL) App Store, which sells software for the iPhone and iPod touch devices and boasts more than 85,000 apps.

Apps for laptops, TV, and smartphonesBut while the Apple App Store sells software only for Apple gadgets, Google's Wave store would be likely to sell apps that work on all kinds of devices, from laptops to Web-enabled TVs to smartphones. Any device with a modern browser should be able to use Google Wave and download related add-ons. The Web search giant is considering selling its own applications through the Wave app store as well, Rasmussen says.

The market opportunity for such wide-ranging applications could be large if Google Wave succeeds in replacing existing modes of communication in the same way e-mail has supplanted letters. "It'll probably transform IM and e-mail systems," says Jeffrey Lindsay, an analyst at Sanford C. Bernstein. "Lots of imaginative developers will build a whole host of new applications. This is disruptive." Brian Pokorny, a venture capitalist at SV Angel LLC, says real-time communication "is a multibillion-dollar opportunity in the next two to five years." The VC firm is considering investing in developers who are creating add-ons for Wave.

Since May, when Wave was introduced, developers have created hundreds of add-ons for the service, Rasmussen says. A handful, including some from software vendors SAP (SAP) and salesforce.com (CRM), have been tested but are not yet available to customers.

automatic voice-to-textOnly six apps are available to customers who are testing Wave. One, from Ribbit, lets users place Web calls to other users and create multi-user Web conference calls. It can also automatically transcribe voice into text. Ultimately it could sell for $2.95 to $19.95, depending on the features, says Ribbit CEO Ted Griggs. "Our hopes are pretty high," he says. "If Google Wave becomes a tool for collaboration, then being early to the game has a lot of value." In August, Ribbit and its owner, BT Group (BT), hired Kevin Marks, who led some of Google's developer efforts, to be its vice-president of Web services.

Done right, Google Wave has the potential to grab traffic and user time away from Facebook; AOL's AIM; e-mail services from Google, Microsoft (MSFT), and Yahoo! (YHOO); and even Skype and Cisco System's (CSCO) WebEx. An add-on from startup 6rounds turns Wave collaboration into a video conference, similar to Skype's. Users can communicate via Web video while editing documents or playing games on Wave. The company hopes to make money by selling virtual goods through its free app.

Another developer, LabPixies, could help Wave compete with online-gaming portals. Its free sudoku puzzle game allows for real-time competitive play. The company makes money through contextual ads, into which Google could potentially share. Google could also insert its ads into other free apps.

Marketing agencies, meanwhile, are already starting to look at how they could use Wave to grow their client companies' brands by sponsoring applications or allowing fans to share photos and chat. Just as brands are now paying attention to Facebook, Wave "is something everyone's got on their radar," says Dan Shust, director of emerging media at agency Resource Interactive, which works with such companies as Victoria's Secret, Hewlett-Packard (HPQ), and Procter & Gamble (PG). "The same thing might come true for Google Wave."

rival services expected quicklyA chief goal for Wave and its apps is to drive use of search, which can be done directly from the Wave service, and to boost sales of Google Apps, the suite of productivity tools that competes with Microsoft Office.

Search and e-mail rivals such as Microsoft and Yahoo are expected to unleash their own Wave-like products in response. "Microsoft and Yahoo will probably bring out something similar very quickly," Lindsay says. (Microsoft and Yahoo are mum on their product plans.) In a statement, Microsoft said: "While it is unclear how Google Wave will address critical needs and help consumers and businesses manage information overload, Microsoft already has solutions in place: for businesses, Office 2010 will span the PC, phone, and browser, enabling people to work when and how they want. For consumers, today over 500 million active users on Windows Live have the ability to communicate and share via popular services like Windows Live Messenger and Windows Live Hotmail."

Rasmussen says his team has already been approached by several companies looking to build their own Wave-like services and connect them to Google Wave so that users of different services can communicate with one another. "We have a vision of a future where there's a Google Wave, a Yahoo Wave, a Microsoft Wave, and they all inter-operate," says Rasmussen, who wouldn't say if Google has had discussions with Yahoo or Microsoft.

Early responses to Wave have been mixed, with some users questioning whether it enhances productivity and others saying it's overly complex. "The big question remains whether it enters the mainstream," says Laura Martin, an analyst at Soleil Securities Group.
Olga_kharif1
Kharif is a reporter for Bloomberg News and Bloomberg Businessweek in Portland, Ore.

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