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Smart. Etherpad is just great. Congrats to Aaron and David on the official change of direction!
I was watching the full google wave demo and they said that the functionality similar to etherpad was the hardest thing they did.
Is this the end, or the beginning? I could definitely see an open source project based on it if the full source were released.
A platform is nothing without a killer app, so this indeed may be more of a beginning than an end for AppJet.

Good luck, guys!

Etherpad is looking awesome. Seems like a good decision to concentrate on that, especially if companies are wanting to pay already :)
Looks really cool, but it would seem like it would get slammed quite hard by google wave soon?
Realtime collaboration is a massive growing market - there's room for quite a few companies.
This is why it's a bad idea to build on hosted web services. They pull out your platform from under your feet, and what are you left with? An apology?

Everyone running on Google App and all the other Rails services will have the same thing happen to them at some point. Stick with stuff you can migrate.

I agree with your last point: "stick with stuff you can migrate". But moving away from Google App Engine doesn't have to be a pain (depending on how much of the storage options you are using) and in the case of AppJet it's simply a matter of setting up "AppJet in a Jar": http://appjet.com/download.
In this case you're left with a lot more than an apology. You're left with all you need to just host it yourself.
On a JSP server with a complex framework that is no longer being actively developed. To me that's the same thing as being abandoned.

It's like this: A guy tells you he will ferry you to England for free. Half way there, he says - hmm, actually, I've changed my mind. I'll take the engine, but here are two paddles - see ya!

I don't think I've been wrong about my predictions about YC companies yet: http://news.ycombinator.com/item?id=279221

I think I may make a page someday with all the things I said would happen to the companies and what actually did happen.

Well somebody needs to build a platform for learning to program.
Just a reminder .. http://utilitymill.com is still up an going strong if you need an alternative.

Of course it's quite different from appjet, but I'd say it's the same category: hosted, rapid web tool development.

And it costs me almost nothing to run, so there's no reason I'd ever take it down.

Been there, done that. It's bittersweet closing down the old project in favor of the new one, especially when the new one came into existence mainly to promote the old. On one hand, you're happy to have had something catch on. On the other hand, you're unhappy to have had something not.

But onward and upward, and best of luck to the AppJets (or now, the Etherpads). They're super bright guys, so it's not surprising at all to see them succeeding.

It's funny, because I have a simple AppJet app that I was considering re-implementing in Rails, having recently learned the basics of the framework. AppJet has just helped me make the decision. Thanks, AppJet!