So what did he say? A skeptic would say, “Nothing really new, but he did package the things we hear about in a form that makes you think.” Some highlights:

Relevant Meta Trends

Cowan pointed out how conventional wisdom trends like cell phones would never get off the ground (everyone has a phone), we would keep building H-bombs, and the crime rate and inflation rate continuing to rise would never come to pass. We now have three near-term Meta trends to deal with: wealth migration (to China and India), internet 2.0 (the net is just getting started) and the rise of managed services.

In this new order, users add value, collective intelligence is harnessed, data becomes the “Intel inside.” Witness the end of the software release cycle, and simple web services will rule. To stay competitive, the language service providers will have to do more than just translate and localize.

The Localization industry, according to Cowan, is rapidly evolving from its current characterization of being fragmented, owner-operated, people-intensive, service-intensive, regionally focused, undercapitalized, desktop-based and paying low salaries.

Cowan warns that if the industry doesn’t respond to change that it will become marginalized due to lack of innovation and manual hand-off processes that are stretched to the limit. Localization will be seen as the costly bottleneck to achieving a global launch. TM (translation memory) value plateaus, while the maintenance process increases, putting pressure on client ROI and vendor margins. Customers will be forced to bypass the collective industry due to a lack of collaboration/standards, and they will turn to more disciplined suppliers (i.e., developers).

In addition, we now have new FIGS... The old paradigm of French, Italian, German, and Spanish is being replaced by Farsi, Igbo, Georgian, Saraiki, and scores of other languages.

In sum, Cowan said, “This is the industry we all hoped it would become: tech heavy, important and big. He added that everyone must scale up their ambitions. Globalizing the enterprise is not about the process of task, it is about the process of the process.”

Not everyone fully agreed with Cowan’s assertions. NCS, a Pittsburgh based language service provider, and Welocalize, when asked about Cowan’s comments, noted they are happy where they are and “one size doesn’t fit all.”

Meanwhile, language is still important in fighting the U.S. “war on terror.” The U.S. soldier’s maximum pay will be increased from US $300 to US $1,000 if they speak another language, while some may even qualify for a US $6,000 bonus. Emphasis will be given to those who speak Arabic and Mandarin Chinese.

The war on terror has spawned another hi-tech startup called Tactical Language. Red Herring, the hi-tech magazine, started its review of this company with the headline, Fight globally, speak locally. Basically, it teaches languages in a video game format.

But the question with all this spending on language is whether will it continue after the hostilities in Iraq and elsewhere cease. Meanwhile, firms like L3 Communications, Northrop Grumman, Language Weaver, Systran and CACI are making record sales. I get frequent calls from companies asking, “How do we get into this game?” My answer is to find a defense contractor or integrator to work with, since they have all the contract listings.

Basis Technology is using another approach; they’re holding a Government Users Conference at my old alma mater, George Washington University. They will cover all the issues relating to language and are offering it free to government employees. A contractor can come for US $495 per person.

And we cannot forget about China. I got 26 emails from China last year. While becoming the world’s factory, it also wants to go after services. The Symbio Group reports that its service centers have grown 500% over the last three years.

Public Companies

SDL’s (SDL PLC) share prices continue at around 200 pence per share. They are now offering a more general business consulting service. Their 2005 results show 78 million pounds in sales and gross margins have increased from 41% to 47%.

Lionbridge (LIOX) reported first quarter revenues of US $99.1 million, which is an increase of US $60.3 million for the same period of 2005. It reported a gross margin of 34.6% for the same period. Its shares are trading around US $7.00 as we go to press.

Systran reports that its first quarter 2006 sales were 2 million euros. Two-thirds came from software publishing and the rest from professional services. Its sales in 2005 were 10 million euros with an operating income of 3.3 million euros.

Private Companies

One private company, which now wants to become a public company, is Merrill Corporation, the parent company of Merrill Brink Translations, reported to have annual sales of US $20 million. We will know more about them when and if the Merrill Corporation IPO registration in February goes through. The IPO market is as “hot” today as it was during the dot.com boom. On May 12, ten IPOs were registered, as opposed to the current daily average of 1.3 IPOs a day.

Another private language firm that went public is Language ANALYSIS Systems. LSA is the “world’s recognized leader in providing name recognition software solutions for mission critical applications.” Industry applications for this software include intelligence and security, financial services, law enforcement and U.S. homeland security. IBM now markets a total of nine name recognition products designed to help search and manage name data. Its sales in 2005 were US $6 million. One blogger asks, “Will IBM buy Lionbridge and Language Weaver now that it has further gotten into the language game?”

Translations.com is a fun company to watch. They received venture capital to make the company grow. They then paid it back and are growing on their own. They claim annual sales now of US $70 million, which makes it the third largest localization firm. However, Translations.com holds on to several of the templates it acquired like Crimson, Terra pacific, Epic, Transperfect and eTranslate. According to one representative I talked to, this gives the company the opportunity to offer boutique services to companies that want them and enterprise solutions when that seems to be in order.

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John Freivalds is Managing Director of JFA Marketing and publisher of The Periodic Tables (Languages, Money, First Class and Toasts). He can be reached at jfa@hughes.net.