The first time I came upon Google Wave was after a strong dose of some Benadryl, so needless to say I didn't quite understand what was being proposed (and I also had some weird dreams about being washed into a sea of Google G's.) I may have drowned that night, never to return to complete sanity, but I did revisit the Google Wave in a more awake and alert state.
Suffice to say, I finally got around to reading more into it and am extremely excited. New things come out all of the time in the IT world, however, actual innovation doesn't peer its head in the door too often. A lot of money is spent by companies trying to centralize their communications infrastructure - Microsoft developed some of the technologies in Sharepoint to act as a dump for things like email and IM, but Sharepoint is a huge development process that can also require a lot of costs for maintenance.
What Google Wave aims to do, essentially, is combine all of your communication protocols into a single trackable entity that comes equipped with a super sweet Outlook rip-off interface.
Microsoft has been developing Live for quite a while now, but there are so many different services involved with Live that I could frankly care less (especially now that Live Search has been re-tagged as Bing.) Google saw this, said ‘too much,' and then someone there came up with the genius idea of making them all the same product. Kudos.