"Our policy is we try things," the Google CEO said, hours after the company announced it was halting development of the complex real-time communication tool. "We celebrate our failures. This is a company where it is absolutely OK to try something that is very hard, have it not be successful, take the learning and apply it to something new."
Schmidt said Wave, despite its lack of market success, was "a very clever product."
"We liked the (user interface) and we liked a lot of the new features in it (but) didn't get enough traction, so we are taking those technologies and applying them to new technologies that are not announced. We'll get the benefit of Google Wave but it won't be as a separate product."
Schmidt said the company likes to let the market determine which products are worthy of further investment and then re-invest in the ones that catch on.
"We have a pretty strong view on this," he said. "As a culture we don't over-promote products...we tend to sort of release them and then see what happens."
Schmidt boiled it down to a mathematical formula. A new product gets announced and gets a certain amount of traction. At some point, growth falls off the first wave of people finishes trying things out. Then, it begins to grow again. "The first derivative of that second growth is a high and accurate predictor of what will happen."
Schmidt said that Buzz, by contrast is doing well with tens of millions of users, basically Gmail users that also use the short-status product.
"Today Buzz is really an extension of Gmail," he said.
The comments on Wave came as part of a 40-minute question-and-answer session with reporters at the Techonomy conference here, following his participation on a panel in which he said that society is not ready for all the changes technology is foisting upon it.