Wave did not take off because there were no Wave servers worth a damn that weren't Google.
Wave protocol is a Sharepoint killer. It's not a new cool social medium, it's a workgroup and corporate information sharing system.
And I want to kill Sharepoint, because the stupid thing only works with Windows.
Many organisations do not want, or cannot, share their information with Google. Google doesn't even use any translucent database techniques to help users keep their data private. Google being a Wave server is useful for some public publishing, but there must be your own private Wave server for Wave to be usable by most of the target market. The target market is the market of Sharepoint, larger organisations who are always more careful with their data.
So Google's error was not to make something noone wanted. It was to make something none of the interested people could use, because they did not release a free Wave server to use inside your organisation.
They will make the same mistake, of assuming people will share their data when they won't, again in future.
And I really don't care that people, usually from Google, say that Google can be trusted not to read users' data. That's not relevant; they can be compelled to reveal it to random other authorities without the users' knowledge or consent, and if anything like that does happen, they don't give any information out as a matter of policy.