WOW. If you have an hour and 20 minutes at some point, this is a must see. The Wave is Google's ambitious replacement of the email, instant message, tweet, blog and pretty much every other means of communication and collaboration currently available. But Google's approach to do this is not by providing yet another replacement, but by linking to these means of communication and extending them transparently.
At its heart, the Google Wave is email done right. Updating the current paradigm of point to point communication bursts offered by email, Google Wave offers a centralized client-server real-time collaborative alternative. What this means is that email is no longer delivered to your Inbox. Instead, your Inbox is a sort of a window into a central location, that essentially hosts a dynamic, ever changing web page which is your email. As people contribute to this web page - called the Wave, the client (in this case a HTML 5 compliant browser) automatically updates itself to reflect a common shared view.
If that is all that Google Wave was, then it would potentially have ended up as an optional Google Labs widget for Gmail. Instead, the Wave team took this further. They added real time - character by character refreshes; provided drag and drop functionality for rich media like photos and videos; enabled collaborative edit features for all content; and provided a means for existing communication mechanisms to interact with the content and updates. Suddenly the Wave seems much more than just a handy email gadget. Instead, it is a new way to think about communicating, sharing and collaborating.
The best part about Wave is that it forces you to think differently about communicating, by providing fundamentally different tools and mechanisms. A particularly enlightening moment in the presentation is when an old Wave was dug up where participants initially began communicating serially like an email, and realized mid-way through the process, that there was a potentially more productive way of continuing the same conversation through the editing features provided in the tool. It is this ability to simultaneously apply two diametrically different paradigms, that is the real potential for Wave. Users will no longer have to choose to learn a new paradigm - instead they can choose to stay the same, and wean off at their own pace.
The second major feature has to be its extensibility. The opening remarks encapsulated Google's approach to Wave - as a Product, Platform and Protocol. True to looking at it as a protocol, Wave developers seemed to have incorporated several real-world requirements into it. One example that sticks out is the ability for multiple Wave implementation to keep each other abreast only of updates that they really 'need to know'. Such an approach reflects today's Legal discovery requirements really well, and demonstrates Google's commitment to making this a broadly acceptable protocol.
The potential issues that Google will face in trying to establish a Wave based communication platform will probably not be technical to Wave at all. Google Wave assumes that ubiquitous connectivity, which seems to be the direction they have been driving with all their offerings. Of course, the Wave is going to use HTML 5's cache functionality to provide offline usage, but connectivity is still going to be critical in Wave's acceptance. HTML 5 brings another item of resistance for Wave's acceptance. It was only recently that Firefox finally overtook IE6 in terms of usage. Browser adoption has and will never be as cutting edge as Google will want it to be. Not having a HTML 5 compliant browser will effect Wave's adoption.
The second issue will be user acceptance. People have gotten used to email in the traditional sense. For the vast majority, thinking in terms of email is as far of a change as they can fathom. Forcing a truly dynamic paradigm upon them, may not be very successful.
The third issue is corporate acceptance. Large scale user and technical acceptance of new technology has always been tied to acceptance in the corporate world. Your company pays for you to learn something new, like say email, and you then take it up on your own. Wave offers collaboration aimed at smaller, widely dispersed teams. Unless companies are convinced about the benefits of Wave-ifying their email or IM, it may end up remaining just a geek's toy.