Google Wave could threaten Facebook, Twitter

As the most influential Web company gets closer to throwing its hat into the social networking ring, there has to be some consternation in the offices of social network pioneers like Facebook, Twitter and MySpace, analysts say.

Google Inc. today released a preview of its upcoming Google Wave collaboration and communication tool to about 100,000 users and developers. The Web-based application is designed to consolidate features from e-mail, instant messaging, blogging, wikis, multimedia management and document sharing, while offering a variety of social networking features.

Analysts call Google Wave the latest, and possibly the most comprehensive, entrant into a burgeoning social networking business that is still largely made up of hot newcomers that have made a strong name for themselves, but are still far from profitable.

Thus Google, with its marketing clout and hip name, may have a good shot at disrupting the likes of Facebook and Twitter, noted Rob Enderle, an analyst with the Enderle Group.

“This represents a displacement threat for everybody,” Enderle said. “Everybody in this space — Twitter, Facebook and MySpace — is nervous at the moment. If they're not nervous, then they're missing the memo. The market hasn't settled and when it's not settled, then something like Wave could come in and make headway.”

Facebook and MySpace declined comment on Google Wave. Twitter couldn't be reached.

Using social network-like interfaces, the tool is designed to enable collaboration and community-building applications, Google said. In a blog post yesterday, two Google Wave developers said that they have been using the tool to set up pub crawls, and share photos and videos — applications that sound pretty similar to how Facebook and MySpace are used.

Dan Olds, an analyst with The Gabriel Consulting Group, said that Wave has the potential to be a serious challenger to Facebook, especially if Google developers get the interface right. This presents a significant business opportunity for Google, considering that Facebook this summer had increased its user base by 700% over the previous year. And Facebook announced just this month that it had grabbed its 300 millionth user.

“The real key to its success will be how easy Google can make the user interface,” Olds said. “It has to be easy enough for Aunt Carmen to use, but have enough sophisticated functionality to keep the kids and tech heads happy. If Google were the first social network, it wouldn't be as important. The basic functionality would be more important. But this is an area where Google isn't first. Facebook, MySpace, and others got there first. Google Wave will have to compete with those services for mass market acceptance.”

Both Olds and Enderle also said that due to some continuing corporate concerns about the security and reliability of cloud computing applications, Google may initially have the most success in convincing individuals to use Wave's social networking features. It will be difficult early on to persuade IT managers to use it as a hosted collaboration and communication tool, they added.

“I think that Wave will be primarily a social network and a place where loose affiliations of individuals get together to work cooperatively,” said Olds. “I also can see it as a business collaboration tool for small businesses, but I think that getting large enterprises to use it for anything other than another a social network will take a while.”

Enderle did note that even as a social network, Wave must compete for users already loyal to the early players. He added that the Wave technology is more complex than traditional social networks.

“The market tends to like simple solutions,” said Enderle. “It's a super product – kind of an uber tool. That's difficult because they have to displace so many [other tools and networks] at once to even get going. Only a company the size and scale of Google could try this. This thing is incredibly innovative and impressive, but getting people to move to it ss going to be a real problem.”

It's a problem of “good enough”, he added. People think whatever network they're using now is good enough so why bother switching and making sure all their friends and family members switch, as well?