SDL Buys Xyvision

On Xyvision’s website today we learned that they have been acquired by SDL. (thanks to @billtrippe for the tweet)  I first ran across SDL while I was working on a globalization project several years ago.   At the time SDL seemed very much focused on the services rather than the software end of things.  Most of their revenue comes from the human translation services business with the software being a necessary third party player.

Since then they have been gathering up many of the key technologies and compaines in the space.  Notably,  the long time standard for translation memory Trados in 2005.  Marko blogged about their acquision of  idiom last year which gave them control of some of the more innovative technology in the space.  He followed that with an interesting discussion of the global content management market that is worth the read if you have never dealt with the problem.

SDL plodded into the CMS market with the acquisition of Tridion WebCMS . They recognized that it is obviously easier to push your globalization services if you own the creation tool as well.  I have had the sense that this company and its market focus has really not been on the radar of the major EMC players. This acquisition pushes them into an area where they upper quadrant does care about. Component content management.

My experience with Xyvision goes back to the middle 90’s when  they were one of about three viable loose leaf composition engines. Xyvision has been doing this a long time and their evolution from an SGML composition and publishing engine into a solution for DITA and  S1000D puts them at odds with EMC Documentum, IBM,  Open Text . 

I am not in a position to evaluate and compare the products and strategies now but if pedigree counts for anything then this event is worth the markets attention.  SDL has money and is approaching their growth in the content management space with similar strategies but different objectives as the other frequent shopper Open Text. OT acquires to expand license position as they are a software company.  SDL is strategically acquiring technologies that feed their services business.  A smart move to be sure.

I wonder though if this kind of consolidation is good for the EMC marketplace as a whole in the long run. When technology innovation runs contrary to a tangential market you care more about – you don’t fund it. It is possible that in the quest to drive services work they will squash increases in efficiency that the customers could benefit from.

It could also be that this is as defensive as it is offensive. Higher end machine language translation is getting very good and long term threatens the services pipeline. Machine translation tools like Language Weaver are a part of the the Human translation process but the what happens when they get too good.  Interestingly I see- SDL is a channel partner for LW. 

I fully expect to see more moves by SDL. As they look for more sources of globalization services this will inevitably drive them into more ECM niches and at odds with more familiar names. Even with the consolidation of the last few years in ECM there is always someone waiting in the wings to step out and try and steal the show.  SDL for ECM vendors is one to watch.

3 thoughts on “SDL Buys Xyvision

  1. 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.

    1. 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.

  2. 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.

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