Other experts like Kirti Vashee and my former colleagues from Common Sense Advisory will certainly post more detailed analyses of this news, but I wanted to document my initial reactions to what was announced today by SDL and LanguageWeaver, the first developer of a commercial Statistical Machine Translation software.
In recent months, I have been thanking SDL for the great job that they are doing at alienating their technology customers by providing sub-par customer service and support. Clients contact us at Milengo looking for alternative solutions, which we are happy to recommend. SDL has been very successful at irritating translators, LSPs, and final buyers with their technology approach.
LanguageWeaver, a pioneer in SMT for commercial purposes, has struggled to sell a product profitably, when it has to compete with free solutions like Google Translate and MOSES. It's main client is the U.S. government and the main language pair is Arabic-English. In fact, the announcement points out that in 2009, the company had a loss of $1 million for revenues of $12.2 million.
So why is SDL paying $42.5 million (or 3.5 times revenue) for a company that loses money?
I believe that -- whether it works or not, and whether it is deployed or not -- acquiring a software company is something that investors at the London Stock Exchange put a very high value on. This is a good story that will boost SDL's stock, just as the IBM Websphere MT deal boosted Lionbridge's stock to the levels that it is today (from one dollar to $5.28). This is a good story that helps SDL to further position itself as a software company instead of a service company.
The second benefit for SDL, is opening a door into the U.S. government R&D funds through DARPA. LanguageWeaver has advanced mostly because of the availability of such funds.
I don't see the technology itself as a major game changer for SDL. SDL had already acquired Transparent Language, a Rules-based Machine Translation developer, and not much has been heard about that technology since. After a little time, LanguageWeaver might take the same route as Idiom's Worldserver, which was growing fast and was virtually discontinued by SDL.
If the patterns of previous acquisitions prevail, SDL will get very excited with LanguageWeaver, but after the excitement wears off, the product will be abandoned to its own fate. So LanguageWeaver clients who already work with Trados, TMS, and other of their products already know the level of service provided by SDL, and should maybe run for the hills when they come offering LanguageWeaver solutions.
Finally, for competitors -- unless SDL gets its act together -- they have nothing to fear. Just keep providing excellent customer service. That's what Milengo does.
I think you pretty much nailed this, Renato. Combine this with Kirti's take on barriers to MT acceptance, and I think we can see where it is all headed. In my opinion, one of the key problems LW always suffered from was an inability to see and recruit LSP's as partners. The direct sale to LSP model did not work. I guess they have now found a partner.
ReplyDeleteQuite obviously, this is SDL's counter move to the LIOX/IBM deal. IBM has been unable to sell its machine translation engine over the years just like LW that continued to lose money, and this made it an easy prey.
ReplyDeleteI am not that sure that SDL will discontinue LW: basically it needs a machine translation engine much more than LIOX that will find very hard to make TWS a success, with or without MT.
Just because SDL is increasingly a software vendor, maybe it should make two separate companies of the software division and the services division.
It seems to me, however, that major players have not yet realized that the competition is elsewhere and that if they can win the services war because of their financial capacity, the lag to the general public, e.g. with Google, is irrecoverable, due to the philosophy underlying their strategies.
P.S. This comment was originally written in Italian and Google translated with little editing.
I'm in complete agreement with you Renato. Believe it or not I actually see this as a good thing for LSPs. Nowadays, I hear more bad SDL stories versus good SDL stories regarding deliverables and although these are two different sides of the house at SDL it begs the question, where is SDL going with this?
ReplyDeleteWho's next? and with moves like this, doesn't this justify even more that the time and effort some clients have been making to find an alternative to Idiom are now justified.
As usual, I will enjoy bidding against them and winning.