Last year we found that more than half of consumers surveyed use machine translation to help them understand foreign-language content they encounter on websites. That should be great news for the MT software companies, but most of that MT is free. Who’s making the money?

It’s not SYSTRAN, the market leader and oldest player in the market, which booked an un-buzzworthy €5.3 million (roughly US$7.8 million) from software in the first 9 months of 2007. Much of that was on the desktop. Rivals like LEC, PROMT, and SDL also sell shrink-wrapped MT software at retail, but none break the US$5 million barrier. Like Language Weaver and IBM, they also sell server licenses as part of bigger service engagements; MT server providers aren’t earning boatloads of MT revenue either. Then there are specialized handheld translation devices from Fluential, IBM, NEC, and SpeakLike; Google’s translation bots; and Nokia’s upcoming photo-to-translation cameraphone for food menus. All these uses comprise small revenue today, but promise ubiquitous MT. All told, the MT developers will bring in maybe US$50 million this year.

Thus, very little software revenue goes to MT developers, but very high volumes of content pass through the free online MT sites. The business model for MT becomes obvious – eyeballs (and accompanying credit cards), not cash from software licenses. Click over to Google or Yahoo! Babelfish for some free translation. Then go to MT vendor sites like PROMT or SYSTRAN for the same. Both Google and Yahoo! offer an additional stack of useful and functional tools for research, productivity, and entertainment. At the MT vendor sites, all you can do is read about the company or buy MT software for your PC.

Will this change in 2008? Not likely. Here’s what we see happening: 1) Microsoft will come out of the MT closet and make its homegrown engine available to a growing circle of partners and applications; 2) Google will plays to its audience with a mashup-able MT engine and integration with the Open Office corps of IBM/Lotus, Sun, and others; 3) Yahoo! will invest in its own MT, choosing from a large buffet of choices but its closeness with Microsoft could send it to Seattle instead of Marina del Rey; and 4) regional players will add MT — Asia Online has been quietly building a multilingual destination and the machine translation technology to populate it.

The net: There will be many more people eyeballing a lot of machine-translated content. The challenge for server MT companies that do not have eyeball-driving traffic – Language Weaver, PROMT, SDL, and SYSTRAN, among them – will be to get their engines installed into places that will monetize content they translate, create their own sticky sites for their translations, or sell lots of engines to enterprises and LSPs that will use MT to optimize their efficiency. Whichever direction the market takes, we expect that it will be a long time before MT inside the firewall becomes commonplace. The “bring me more eyeballs” model will drive development for the next few years. For more detail on what’s happening and where the MT market is going, see the members-only Quick Take “MT Attracts More Eyeballs than Money.”