I gotta disagree with the comments that Rapportive doesn't have anything to worry about. This is completely a "good enough" solution. Additionally, with Google building it in house one of the largest acquisition targets just fell off the map.
I'm a Rapportive user but I do think they have a lot to worry about.
Is Google eating Rapportive lunch? It very much looks like it, I agree with you.
jmathai, thanks for your comment, and for using Rapportive! We think our social integration and support for Google Apps users differentiate us from the People Widget, among other things, but rest assured we're not sitting still. We've got some features coming out very soon that will give answer to this.
I never underestimate a startup. I'm sure you guys had anticipated something like this being launched anyway so it's not completely out of the blue.
Good luck!
They certainly have a lot to worry about, considering you do not have to do any installation to use the Google widgets something a normal user wants.
Rapportive is still a far better product than this Google Chat widget. I'd say it's a Rapportive killer if they added LinkedIn, Twitter, FB and Tungle integration, but they would never do that.
This is the first time I've heard of Rapportive, and I'm finding it pretty useful so far.
If nothing else, these articles about the new Gmail feature gives them some publicity.
I think as log as Google doesn't allow third party status updates like Twitter, Facebook or LinkedIn Rapportive doesn't have to worry to much (at least I won't switch back).
Rapportive is now a tiny improvement (say from 6 to 8) upon native Gmail. Before it was a huge improvement (from 0 to 8).