Localization is something that is actually very hard to do. L10N (Localization) takes up a significant amount of resources during alpha and beta stages of software development and timing is rather critical on the whole process. In addition, it adds significantly to the project costs and one does risk delays in the process (on the order of months) when a L10N issue is uncovered.

The fact that Microsoft has as many L10N applications as it does points to the fact that they are trying to meet the global challenge more so that many other companies have tried. However, as always, there will be glaring errors. They have invested many billions on the L10N effort since 1996 going as far as opening up offices in other countries to try to understand the local markets and respond to those local needs. In addition, they have partnered with some of the biggest L10N companies and they worked hard to push the L10N effort forward to the point of where it is today.

Even in Microsoft Research, they are trying to address some of these issues. Longhorn having L10N plug in is one of the products from MSR (from what I remember reading back in 2001).

But still, this is a very complex area for software as there are many L10N issues that just drives software developers nuts. It's hard enough to write software that behaves one way for one class of users, now imagine 54 different classes of users and cultural issues to boot.