The online auction giant's intention to sell products around the world using language translation software makes its stock take off faster than a transcontinental jet.
Despite a slight pullback early today, eBay shares are up about 25 percent this week on optimism about the company's international expansion plans, sparked by a presentation CEO Meg Whitman made Monday at the Pacific Crest 2000 e.conference in Vail, Colo.
Can eBay translate translation software into bigger profits? Should investors believe Whitman's vision that the auction site will help revolutionize the way people around the world buy and sell merchandise?
Many business and translation software experts say Whitman's vision of convenient e-commerce worldwide is a pipe dream, at least for the foreseeable future. They lament that current editions of translation software are buggy at best, unable to handle the nuances of regional colloquialisms, informal shorthand and slang--common ways to describe items listed on eBay.
In addition, each country presents unique cultural and legal challenges regarding the sale of many items--from computers to Nazi paraphernalia.
Translation companies don't deny that their technology is clunky, especially for documents such as literature, love notes or anything requiring poetic license. They also warn that translation software isn't a good idea for sentences that require precise wording, such as corporate policy statements, legal disclosures and descriptions of medical procedures.
Although newer software comes with memory banks that store complex sentences and translate them more accurately, many programs translate word for word--irrespective of structural differences between languages.
Even veteran antique shoppers may have trouble reading automatically translated versions of the most basic product descriptions on foreign eBay sites.
For example, eBay's German site offers an array of lamps for collectors. When translated by software at FreeTranslation.com the description of one item reads:
"Table lamp high a ca.42cm with transparent glass screen and flowers in the youth style engraved once should broken go. The screen, should be also that no problem, for you can amount to see is worthwhile it individually with me nachbestellen. The delivery costs for this DM 11.- within the BRD. favor you also my further offers at. It yourself again and again!"
Fortunately, this posting includes a photo, but many items don't.
Bottom line: Although it's widely available and dramatically improved, translation software is prone to error and generally can't replace human translators for most tasks.
"Computers are just not there yet. It's the nuances and inflections and idioms and secondary meanings that will throw off these programs--even though they're getting better all the time," said Steve Cole, vice president of marketing for New York-based ClearCross, which helps businesses navigate the regulatory and logistical barriers of global commerce.
"It's almost an insurmountable task. Maybe they're at 75 or 80 percent effectiveness now. But the last 20 percent is 90 percent of the work."
Perfecting the software may be the least of eBay's concerns: Government regulations abroad and political pressures in the United States are likely to choke the online auctioneer's early efforts, experts say.
The quagmire of conflicting and illogical regulations that governments create can madden even the most enthusiastic internationalists.
For example, it's illegal to export a computer with a clock speed of more than 400 MHz to China, even though most personal computers built by American companies are much faster. The United States bans the export of such machines because of concerns that they could be used to configure weapons or hack into military databases.
Brazil imposes a 200 percent import duty on all compact discs imported into the country. If an eBay seller in the United States hawked a used CD for $5, a Brazilian buyer would have to toss in another $10 when he goes to pick up the order--and probably would have to spend hours in line at the local customs office.
"We certainly foresee a time when governments recognize the power of technology and will work to make this easier," said Jay Shen, co-founder of Menlo Park, Calif.-based MyCustoms, which helps companies overcome bureaucratic muck when initiating commerce with foreign customers. "But working with governments, simply, is very difficult. The process is going to take a very, very long time before anything substantial materializes for eBay.
"The World Trade Organization tried to work on the problem--and there were riots," Shen said of the WTO's annual meeting last year in Seattle.
Anti-WTO demonstrators thronged the streets at the December conference, protesting everything from genetically modified butterflies to the creeping ubiquity of U.S.-style capitalism. Delegations for the Geneva-based body went home with little accomplished in creation of global commerce protocols.
Despite the difficulties eBay faces, it's easy to see why the San Jose, Calif.-based company is trying to find buyers and sellers abroad.
Tower of Babel
About half of all Web users are not native English speakers, according to Global Reach. By 2003, only one out of every three Web users will be in the United States, and transactions outside the United States will account for 56 percent of the worldwide e-commerce total by 2003, according to International Data Corp.
Evidence also suggests that eBay customers would browse--and possibly spend--more if they perused items in their native tongues. Web users stay twice as long and are three times as likely to buy from sites presented in their native language, according to research by Gartner.
Because of the potential for growth, eBay isn't the only company capitalizing on translation software and the vision--however far-fetched--of an Internet-empowered economic revolution.
Lernout & Hauspie Speech Products, a Belgian company with U.S. operations in Burlington, Mass., slumped in the broader market collapse in the spring but is rebounding sharply based on sales of its translation software. The stock is up 17 percent since Friday and 54 percent since the beginning of the year.
Alex Pressman, president of Redwood Shores, Calif.-based Uniscape, is bullish about global e-commerce. He said eBay can probably get away with imperfect translation software: Descriptions of items are relatively basic, and people would equate mistakes in item descriptions with the seller or the translation software--not the quality or brand identity of eBay.
Pressman, whose company provides multilingual Web sites and international e-commerce consulting, doesn't envy the bureaucratic and regulatory hassles that await eBay. But he was happy that the stock has taken off because of its global initiatives.
"The big thing we haven't seen in the past is that globalization talk moves your stock in a positive direction. That's a big development because finally, the investor sees the benefits," Pressman said. "Most people think they're an uneducated bunch only thinking about America, not the global implications. It's obvious that this now means something in terms of positive revenue."