The translation is offloaded to remote servers, which introduces a slight delay in the conversation but reduces the amount of computing power needed by the phone. That does put limits on the number of people who can talk at once, since there's only so much traffic that the servers can handle (at least for now). But that could change in the future.
HOWSTUFFWORKS: How Universal Translators Work The app is also on an open platform, so in theory any country could set up a server and start supporting another language.
Google, introduced Conversation Mode for its popular Google Translate last year. The app was last updated June 20, to version 2.4.2. The Google app is reportedly not quite as accurate, however.
Whatever limitations VoiceTra4U-M has, it's better than a fish in the ear.
via New Scientist