A little bit more than last year they did an impressive* demo from English -> Mandarin. There were slight errors that sometimes flipped meaning (but only slightly hindering, which made it more believable). This seems to be a first step along productization of that research.

http://blogs.technet.com/b/next/archive/2012/11/08/microsoft...

*Well relatively, it would be super lame when compared to the kind of tech one would find in a child's toy aboard a starship.