Comments on: SDL Buys Xyvision

By: Marko Sillanpää

Marko Sillanpää — Thu, 09 Jul 2009 21:02:46 +0000

One reason SDL is able to see those margins is they really have only a few employees. Most of their translation work is done by freelancers or contract translators. For them it’s a feast or famine sort of career. If the work is not there SDL doesn’t have anyone to pay and even if there is work they have a lot of control around the rates they will pay.

This also plays into their acquisition strategy in that all three companies they have bought (Trados, Idiom, and Xyvision) put pricing control in the hands of the company looking for documents to be translated.

SDL has positioned themselves into an interesting market as a middleman where they can tune both what they charge for translation work and what they are willing to pay. In four years the cost per translated (unique) word went from 8 cents to 5 cents while the cost of a translation remained $25 per document and 10 cents per word. Not only are they making a 5 cent margin per word but they also charge for every time a word appears.

By: Lee Dallas

Lee Dallas — Tue, 30 Jun 2009 01:10:11 +0000

that’s just it – I haven’t decided if they are really trying to become a s/w company or if the goal is to support the services business by “greasing the skids” with front end tooling. Granted – its really expensive grease but if you look at their financial performance in this horrible economy you have to agree they are doing something right. There are not a lot of tech companies that saw the kind of returns they did last year.

By: jssilver

jssilver — Tue, 30 Jun 2009 00:12:23 +0000

Very difficult for a services company to transition to a product company. Hard to explain to investors why you’re shifting from bottom line management (the key to success in the services biz) to top line growth (the major success factor in the product business), and why you have to make huge up-front investments in innovation a long time before you see a return.