SDL International, the world's third-largest translation/localization agency announced today its plans to acquire TRADOS, the maker of the world's most popular machine translation software.

In the translation industry, this is very big news.

Every translation agency that uses TRADOS (which is most of them) and thousands of their clients that also use TRADOS will be affected by this deal.

And this is also a very big gamble for SDL. The company is betting that the "full service" solution of software and services is what clients want and need.

Meanwhile, Lionbridge is bettting on a different business model and it will be very interesting to see how this all plays out.

I had a brief chat with SDL on Friday about this deal and they are clearly very excited. SDL has been competing with TRADOS with a lower-priced software tool that was steadily gaining market share. In fact, SDL had been running a marketing campaign that basically urged companies to "switch" from TRADOS to SDL. Now, companies don't need to switch.

The larger question will be if SDL can succeed where TRADOS has struggled: in selling enterprise content management software. SDL thinks it can, and I think they'll do a good job, provided they get a handle on what large enterprises really want and need. The traditional business model of selling enterprise software is broken and in need of new ideas and pricing models. I look forward to seeing how SDL tackles the TRADOS GXT software.

Here is the press release