Read the article: "Search is just the problem they first applied AI to, and the one they've grown to dominate. In the future they will have much bigger fish to fry."
I'm not that familiar with Wave (other than using it for a bit), but can you expand on the connection between Wave and AI?
Basically the Wave protocol modeled real-time communication in a way that Google Wave Bots & Gadgets could be deployed to add value to conversations among groups. Google Wave was intended to be a playground where humans and AI algorithms could meaningfully share information.
AI is not a market - AI is a tool. Google is NOT poor at product development. However, it does seem that they have failed to build some products around AI tools (like Google Wave).
Sure Google (and others) will continue to make products by applying AI to market problems.. but they've been doing this their entire existence.