[Google] is developing software for the first phone capable of translating foreign languages almost instantly – like the Babel Fish in The Hitchhiker’s Guide to the Galaxy.
By building on existing technologies in voice recognition and automatic translation, Google hopes to have a basic system ready within a couple of years.

Google’s head of translation services, Franz Och, is quoted saying “We think speech-to-speech translation should be possible and work reasonably well in a few years’ time ... Clearly, for it to work smoothly, you need a combination of high-accuracy machine translation and high-accuracy voice recognition, and that’s what we’re working on.”