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Translations.com Buys Alchemy Software Development
Posted by Donald A. DePalma on March 6, 2008  in the following blogs: Translation and Localization, Market Data
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In a deal that continues the consolidation of the language technology sector, Translations.com today announced that it had merged with Alchemy, a Dublin-based software company that specializes in tools for localizing software. The companies declined to provide any financial details on the transaction, but Alchemy CEO Tony O'Dowd acknowledged that the deal involved a bidding war and will result in Alchemy operating as an autonomous business unit inside TransPerfect/Translations.com (aka TDC).

We spoke with O’Dowd while we were in Dublin this week. He told us that he first discussed the deal with TDC CEO Phil Shawe about a year ago. Both chiefs took their time getting to know each other’s capabilities, people, and potential contribution to a joint operation:
  • Shawe saw rich technology. Alchemy develops and sells Catalyst, the most widely installed visual localization software. Last year it introduced its Language Exchange translation memory server that allows a company to link disparate translation memory databases into one. Alchemy also offers translation memory for HTML and will soon release Publisher, a TM for written word documents produced by tools such as FrameMaker, InDesign, and Quark.
  • O’Dowd saw channels plus resources. Number 5 on our top 20 list of translation companies, TDC has enjoyed strong organic growth over the last few years, with especial strength in verticals such as travel and leisure. Besides getting more than 180 TDC salespeople selling Alchemy's technology, O'Dowd will meld TDC's Global Link workflow-centric translation management (TMS) technologies with Alchemy's development efforts. He sees this engine, created 10 years ago as eTranslate, as a backbone that will tie Alchemy's product offerings into a cohesive global information management solution.
Coming on the heels of SDL's acquisition of Idiom, this deal invites several comparisons.
  • Independence. O'Dowd insists that his customers are more interested in innovation than in independence. That said, TDC has an established tradition of letting acquired companies operate autonomously. We advise Shawe to move all his software assets under O'Dowd, erect a solid barrier between him and the TDC language service divisions, and give him a mandate to compete with any and all language technology suppliers. O'Dowd should treat TDC's various companies as very important customers (think primus inter pares), but Alchemy should not be exclusively beholden to their requirements.

  • Choice. With Global Link, "we can plug into everything and let desktop TM tools like Déjà vu and WordFast plug into a common backbone." He insists that won't change: "Choice is important to our clients. A reduction of choice would really tick them off. They want to use whatever meets their needs. We won’t jeopardize that."

  • Competition. O'Dowd told us that "I view this deal as balancing the market. Today one language service provider is leveraging its monopolistic position. It tells users that 'if you want to work with us you have to be certified by us and use the latest release of our products.' Well, now, there will be another LSP with deep pockets and technology. We will enable choice."

  • Conflict. Because Alchemy's customers are independent software vendors like Oracle and Symantec rather than translation agencies like Moravia and VistaTEC, don't expect to see the blow-back that last month's acquisition caused. As a small technology company providing core localization technology to big ISVs, none should be threatened by this move. On the LSP front, O'Dowd says that he will happily "sell" technology to translation agencies, but it will have a price: "If you give software away for free, it's a one-way road to going out of business. If users want a scalable solution for next-generation translation memory, fast search, web-based client, and multi-platform support, they need to fund that. It's the only way that it can be supported, enhanced, and innovative."
We think that this acquisition is good news for both companies and their customers. It gives Alchemy the resources it needs to grow from its niche market into a language technology supplier that handles a broader swath of the global information management challenge. At the same time, it gives Translations.com a quiver of powerful software, strong leadership for growing its software business, and a better capability for localizing software. Alchemy customers will benefit from a more financially secure supplier, while Translations.com buyers will gain access to innovative technology for managing both global content and application code. The major question that remains is how aggressive the new Alchemy Software will be in going after the nearly 90% of translation activities that are managed by language service providers -- and how they will react to this new supplier of business-critical technology. We think that this deal will cause other large LSPs to review their technology portfolios.

 

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