Vasont, TransPerfect, and Astoria. Really??
Disclaimer: This post is complete speculation. I have no useful inside information to work with regarding the merger.
As you may have heard, TransPerfect recently acquired Vasont. (The press release uses words like “merge” and “integrate” and carefully avoids the A-word.) This is the second component CMS that TransPerfect has acq…merged with in the past few years. The first one was Astoria in 2010.
Thus, TransPerfect now has a lineup of localization services, translation management software, and two component CMSes.
Localization service providers (LSPs) are facing a generally difficult market—there’s a ton of demand for localization, but vendors are squeezed because of the following factors:
- Most customers focus on price (pennies per word) and not quality.
- Increased use of machine translation (sometimes on the client side, sometimes on the vendor side).
- Increased use of automated formatting (based on XML), which greatly reduces the revenue stream from desktop publishing.
- Use of technologies that support incremental translation and better pre-translation matching (thus reducing the total number of words to be translated by the vendor).
Given these challenges, it seems logical to extend the LSP’s revenue stream with any or all of the following:
- Localization software, such as translation management and terminology management systems
- Content creation software, such as content management systems
- Professional services, such as systems integration, content strategy consulting, and so on
Actually making this happen is challenging for the LSP because:
- Selling enterprise software is different from selling localization services.
- The LSP must become a trusted partner rather than a commodity supplier.
- To sell software or services related to content development, the LSP must be involved at the beginning of the content lifecycle. Most localization services are sold at the end of the content lifecycle.
- Most clients have separate content and localization roles, which makes it difficult for the LSP to cross the gap from the (usually late in the cycle) localization manager to the (usually early in the cycle) tech comm or marcom manager.
If the general strategy is “move upstream in the content lifecycle,” then acquisition of content-development technologies makes a whole lot of sense. What seems weird to me is the acquisition of two component CMS companies. Why would TransPerfect do this?
Disclaimer #2: Transitioning from “pure speculation” to “magical thinking.” Consider yourself warned.
Revenue? I think not.
TransPerfect has been on the Inc. 5000 list as a rapidly growing company for several years running. The company is privately held, but Inc. has their 2012 revenue as $341.3M, up from $220M in 2009. That works out to around 15% annual growth. To keep that growth rate going, TransPerfect would be looking for roughly $50M in new revenue in 2013 and $60M in 2014. It’s extremely difficult to find revenue information about Vasont (and for bonus points, the company has both a sister company and a parent company), but it looks as though revenues are somewhere in the $6M to $7M range based on a couple of moderately sketchy sources. The extreme best case scenario is that Vasont/Progressive/Magnus/Whatever contributes around $10M in new revenue.
Could it be the technology?
After a deeply nonrigorous search, I could not locate any patents for Vasont, Progressive Information Technologies, or Magnus Group. It’s possible that Vasont has developed technology in the CCMS space that is interesting but unpatented.
What about Astoria?
Will TransPerfect maintain two separate CCMSes? This seems thoroughly inefficient, but it’s not clear to me that it’s even possible to combine the two systems into a single one.
TransPerfect could possibly market the two systems differently to appeal to different customers. For example, Astoria might be the SaaS solution and Vasont the on-premises solution. Or maybe one system would be positioned as the “enterprise” system and one as the “small-to-medium business” system.
From a software product management point of view, none of these options makes a whole lot of sense. Even if TransPerfect intends to keep developing both systems separately, they face an uphill battle in convincing potential buyers of their plans. A few years back, SDL acquired two CCMS systems. They repositioned Contenta for “non-DITA” and S-1000D solutions and left Trisoft (LiveContent Architect) in the DITA space, thus separating the two systems by content model and industry vertical. The transition was difficult for some customers.
It must be about localization sales.
I’ve reached the conclusion that this acquisition is about sales. Specifically, it’s about localization sales. If TransPerfect is selling CCMSes to various companies, that provides them with a logical pipeline of prospects for translation management systems and localization services. The $10M or so that each CCMS might produce in annual revenue is simply the entry fee for access to potential new customers for bigger and better things.
In this context, buying up direct competitors and leaving them more or less “as is” makes some amount of sense.
But will it blend??
I’m not sure this is going to work. Even if TransPerfect intends to keep both systems under development, Vasont and Astoria’s competitors will certainly highlight the risk of buying a CCMS that has an in-house competitor.
Combining the two systems and creating something that provides the best of both systems—call it “Vastoria” or “Assont”—would make more sense in the long term. Perhaps they could organize an in-house death match? (“And may the odds be ever in your favor…”)