At the end of last week, Google announced an internally developed project called “Wave”, an attempt to build a new communication platform combining the best of email, instant messaging, and document collaboration.

Wave is a pretty radical project, developed in secrecy at Google’s Australian outpost by some of the same team as first developed Google Maps. Consisting of 3 separate pieces of work, Wave is a protocol, a piece of software, and a platform for running applications.

Starting at the bottom, the protocol for Wave is based on XMPP, allowing for clients and servers to talk to each other, and crucially, for servers to talk to other servers. Without this ability for inter-server communication, this would just be another (albeit shiny) Sharepoint or Wiki implementation with an instant messaging client bolted on. The Wave protocol is openly available in it’s current form on the Google Wave site.

You then have the Wave software, which Google says will largely be open-sourced, allowing companies to run their own local implementations of Wave and control the security and data retention of Wave.

Finally, you have Wave as a platform, consisting of the Wave software and protocol, along with a set of application program interfaces (APIs), which together let 3rd-party applications run on top of a Wave, interacting directly with clients.

When you combine the 3 components of Wave together, you get an extremely powerful proposition, which really could go anywhere.

As a document collaboration and group discussion product, it has as an impressive set of features, and with the open protocol and source code for the server, the possibilities for companies to add Wave functionality to their existing applications like IBM’s Lotus Notes and Microsoft Exchange are huge. Whether they will or not is another question, but if Google integrate Wave into Gmail, then people will start to see the power of collaboration and demand the same functionality in their business applications.

While it replace email? I’m not so sure, at first glance it has everything in place, but the network effects of email are huge – I can email any one of billions of people right now, and if I’ve got something interesting to say, they can read it and reply.

Maybe the big question for Wave is, how do you make a billion people switch from their existing email client to a new service, when most of them consider email “good enough”?