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Fedora 9 Would Cost $10.8B To Build From Scratch 293

Posted by CmdrTaco
from the that's-a-lot-of-hats dept.
ruphus13 writes "The Linux Foundation's recently released report claims, '... it would take approximately $10.8 billion to build the Linux community distribution Fedora 9 in today's dollars with today's software development costs.' The article states why this might actually understate the value of the distros, though, since it doesn't include the power of the brand and the goodwill value. 'There were several approaches that the Linux Foundation employed to reach the $10.8 billion dollar figure, including calculating the number of lines of code in Fedora 9 (204,500,946), and using an average programmer's salary of $75,662.08 — as determined by the US Department of Labor — to measure development costs ... On the balance sheets of Coca Cola and many other huge corporations, you find goodwill listed as a major asset.'"
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Fedora 9 Would Cost $10.8B To Build From Scratch

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  • by jollyreaper (513215) on Thursday October 23, 2008 @10:05AM (#25481407)

    They can spend twice that much money and only deliver a tenth of the functionality! That's a win! I think.

  • Uh, Goofy Accounting (Score:5, Informative)

    by smack.addict (116174) on Thursday October 23, 2008 @10:07AM (#25481427)

    Goodwill only shows up on the balance sheet when an acquisition or some similar event occurs which creates a discrepancy between the purchase amount and the balance sheet of the acquisition.

    You don't just make up a number and add it onto your balance sheet.

    • by Ngarrang (1023425) on Thursday October 23, 2008 @10:10AM (#25481475) Journal

      You don't just make up a number and add it onto your balance sheet.

      And THAT is why I failed my economics class. My teacher never did appreciate my 'creativity'. I would simply explain that I wanted to be a CEO someday.

      • by besalope (1186101) on Thursday October 23, 2008 @10:45AM (#25481941)

        You don't just make up a number and add it onto your balance sheet.

        And THAT is why I failed my economics class. My teacher never did appreciate my 'creativity'. I would simply explain that I wanted to be a CEO someday.

        Economics does not use Balance Sheets, that would be your Accounting course. Perhaps that is why you failed?

        • by Ngarrang (1023425)

          You don't just make up a number and add it onto your balance sheet.

          And THAT is why I failed my economics class. My teacher never did appreciate my 'creativity'. I would simply explain that I wanted to be a CEO someday.

          Economics does not use Balance Sheets, that would be your Accounting course. Perhaps that is why you failed?

          No, I seem to remember having to do something that looked like a balance sheet in my micro-economics class. I remember in accounting doing a different type of balancing. Those numbers always came out correct, though.

          'Misc' is your friend!

        • Re: (Score:3, Funny)

          You don't just make up a number and add it onto your balance sheet.

          And THAT is why I failed my economics class. My teacher never did appreciate my 'creativity'. I would simply explain that I wanted to be a CEO someday.

          Economics does not use Balance Sheets, that would be your Accounting course. Perhaps that is why you failed?

          His teacher failed him because his improper application of the wrong tools in the wrong field could lead him to politics.

    • Goodwill only shows up on the balance sheet when an acquisition or some similar event occurs which creates a discrepancy between the purchase amount and the balance sheet of the acquisition.

      If "goodwill" is not the right word for the value of intangible assets such as trademarks, what is?

      • by Kohath (38547)

        If "goodwill" is not the right word for the value of intangible assets such as trademarks, what is?

        Start by picking some word that doesn't already have a specific alternate meaning in the same context.

      • by profplump (309017) <zach-slashjunk@kotlarek.com> on Thursday October 23, 2008 @10:51AM (#25482041)

        "Goodwill" is a specific subset of "intangible assets". Other items such as patents, copyrights, trademarks or other contractually transferable rights or privileges would be in the same category, but are not "goodwill", which has a specific meaning in accounting.

      • Re: (Score:3, Informative)

        by Otter (3800)
        That's exactly the sort of thing "goodwill" includes. But, as the OP says, that value has to arise from a transaction. (For example, you spend $100M to buy a company with $80M in assets and book the remaining $20M as goodwill.) You can't just invent a number and apply it to your own balance sheet.
      • by WhiteWolf666 (145211) <sherwin AT amiran DOT us> on Thursday October 23, 2008 @11:07AM (#25482269) Homepage Journal

        Uh, Goodwill is the correct term.

        Has GP looked at GE's balance sheet? [ge.com]

        GE claims $4.5 billion in "Licenses, Patents, and Trademarks". While the GP is correct that these values primarily arise as a function of acquisitions or sale of assets, the only time that corporate evaluations really matter is during acquisitions, sale of assets, and other forms of stock/ownership valuations.

        Let me put it the way GE puts it (and GE is the *gold standard* when it comes to Goodwill, except for perhaps the Federal Reserve, who has a totally invented balance sheet.) There are 9 companies with triple A credit ratings, and GE's ability to manage accurately manage goodwill is one of the reasons it is a triple A rated company.

        Upon closing an acquisition, we estimate the fair values of assets and liabilities acquired and consolidate the acquisition as quickly as possible. Given the time it takes to obtain pertinent information to finalize the acquired companyâ(TM)s balance sheet, then to adjust the acquired companyâ(TM)s accounting policies, procedures, books and records to our standards, it is often several quarters before we are able to finalize those initial fair value estimates. Accordingly, it is not uncommon for our initial estimates to be subsequently revised.
        Emphasis added for the benefit of readers.

        You *do* just stick those things on your balance sheet; the issue is being able to justify them. If I put my good name on a financial statement to a bank, the bank probably won't take me seriously, unless my name is something like "Warren Buffet". If my name is "GE", and I "give" that name to some business effort, it is a very serious transaction with serious financial consequences, and I can potentially use that to either buy or sell assets, as well as finance offers, and issue debt.

        The credibility of the "good will", and the managers who evaluate the relevant values is what determines the financial values of those intangibles. They're only intangible in that they are intellectual concepts, and in many ways are just as "real" as stock or other corporate paper holdings.

        • You *do* just stick those things on your balance sheet; the issue is being able to justify them

          Not if you want to remain free from investigation of fiscal impropriety (as a catch-all term for the various statutes you'd be violating).

          Goodwill is a "soft" number a lot of time, in the sense that it is subjective -- however, there are USGAAP methods required for calculating goodwill based on estimates of future profitability (which is the whole process of valuation). When your balance sheet indicates a value

        • by kesuki (321456)

          your own post suggests that past history suggests that GE has been very good at Correctly Valuing 'goodwill' on balance sheets in a real world stock market valuation proposition.

          so they're not making up numbers. they're taking numbers and applying them to facts that are known to insiders, and creating a number that approximates the real value in dollars of that factual information.

          knowledge is power, and in this case, power equals money. it's the calculation of how much knowledge equals how much power, and

    • by Colin Smith (2679)

      You don't just make up a number and add it onto your balance sheet.

      But you just said that you do!

       

      • by Kohath (38547)

        Subtracting the balance sheet value from the purchase price is not "making up". Subtraction is not magic to many people.

    • True it should not be used on an accounting sheet but Goodwill is defiantly something to be considered when setting the buying or selling price of a company. Why do you think it was Lenovo wanted so badly to keep the thinkpad brand name when the took it over from IBM?

      • Why shouldn't it be used on an accounting sheet?

        Are the trademark's IBM, or Pledge, or Clorox worthless?

        The defining ability to sell products in those categories might actually be the name you sell them under! It could potentially be the *most* important factor, above and beyond support, product quality, even price!

        This is *very* *real*.

        • Because there is no proper way to value it, show me the formula for figuring out the value of a name brand..

          • Through the years car manufacturers have put "Handling tuned by Lotus" on their cars as a selling point. Lotus has immense goodwill on the handling front, as the name is practically synonymous with excellent handling.

            Thus the goodwill for Lotus is that manufacturers will continue to come to them for handling expertise (much of Lotus' business is engineering contracts). The reputation (goodwill) ensures repeated business for Lotus and increased sales for their customers who advertise the Lotus involvement. L

    • by tehcyder (746570)

      Goodwill only shows up on the balance sheet when an acquisition or some similar event occurs which creates a discrepancy between the purchase amount and the balance sheet of the acquisition.

      You don't just make up a number and add it onto your balance sheet.

      Lots of companies do exactly that, but they call it "brand valuation" or something similar.

  • by Anonymous Coward on Thursday October 23, 2008 @10:09AM (#25481457)

    ...is like paying airplane manufacturers by weight.

    • True. But estimating the costs it is a better mechanism. A heavier airplane is normally more expensive to build. So it probably trends that an estimate cost is proportional by the weight of the airplane.

      The same thing with coding. Saying programmer A is more valuable then programmer B because programmer A wrote more lines, is of course stupid. As they are doing different things, or approaching the solution differently. However using lines of code when you don't have other variables (eg. man hours, skill s

    • There might be something to this though.

      1 year I wrote about 750,000 lines of code to kick off a new system. (15% comments).

      The guy sitting 1 cube over was on a production support project... bug fixes, small enhancements.

      We were both making about $80,000 at the time.

      A clear difference in productivity. I've been promoted since then & have goten raises. But if I was getting paid by lines of code to make that salary, the other guy would probably be have a salary qualifying him for extreme poverty.

  • Erm! (Score:5, Funny)

    by cosmocain (1060326) on Thursday October 23, 2008 @10:10AM (#25481485)

    [...]to build the Linux community distribution Fedora 9 in today's dollars[...]

    I'd rather build it in C with a modest compiler.

    • Yes but it would be much much larger given the size of today's dollar...
      • Re: (Score:3, Funny)

        by ColdWetDog (752185) *

        Yes but it would be much much larger given the size of today's dollar...

        And it would crash, hard, every couple of years and you would need the federal government to reboot it. Not a good idea. Go with the C compliler.

  • I'd rather see... (Score:2, Insightful)

    by thered2001 (1257950)
    ...a similar estimate for the kernel alone. Or, perhaps a more generalized number which would take into account other distros.
  • by maillemaker (924053) on Thursday October 23, 2008 @10:12AM (#25481505)

    I wonder if I can spend some of my karma down at Taco Bell for a burrito?

  • by seeker_1us (1203072) on Thursday October 23, 2008 @10:13AM (#25481523)

    According to an Inquirer article, the estimates were about $10 billion [theinquirer.net].

    I would think it would cost more than $10.8 billion to develop FC9 from scratch then...since it's a better OS.

    • At last! We finally live in the days when money throwing money at a project can magically make the results better!

    • Re: (Score:3, Informative)

      by Sockatume (732728)
      Your better OS = more expensive rationale does not include the elusive "throw money down a hole" factor of marketing. Gates-meets-Seinfed and I'm-a-PC combined cost $300m, fully 3% of that entire budget.
  • by Peter Cooper (660482) on Thursday October 23, 2008 @10:18AM (#25481565) Homepage Journal

    I bet if you put the specs on eLance, there'd be a company in Romania somewhere bidding to do it for about $427.33, give or take a few dollars :)

    • Re: (Score:2, Funny)

      by ePlus (1041568)

      Well C is the most spoken language in Romania. ;)

    • by kestasjk (933987) *

      I bet if you put the specs on eLance, there'd be a company in Romania somewhere bidding to do it for about $427.33, give or take a few dollars :)

      I've had my open source code plagiarized and sold on as their own work by a Romanian "development" company called fyb.ro [kuliukas.com] (though they sold it on for ~$4000 and my code is rather less than the linux kernel), but in principle I actually wouldn't be surprised at all. :-)

  • by nurb432 (527695) on Thursday October 23, 2008 @10:22AM (#25481625) Homepage Journal

    Thats not a fair comparisons of cost.

    Especially since you are comparing lines of code in OSS to lines of code in CSS, Its like comparing 2 fruits, they are close, but not the same.

    • so you've worked on both kinds. if i gave you 1000 lines of code, minus the legal garbage, you could tell me which is which then?

      • by nurb432 (527695)

        Actually, yes i have worked on both free and commercial code and its not fair to compare the two in line count=dollars.

  • Imagine... (Score:3, Insightful)

    by parvenu74 (310712) on Thursday October 23, 2008 @10:35AM (#25481779)

    Ten billion for an operating system... am I the only one thinking that the money we spend on military adventures and bailing out Wall Street would be better spent funding the creation and development of open source software?

    • by WK2 (1072560)

      Firefox and the Debian dunc-tank experiment have demonstrated that money does not necessarily make open source projects better.

    • by Viol8 (599362)

      If I want to pay for software I'll buy it , I don't want to have to start paying for it through friggin taxes FFS!

    • Re:Imagine... (Score:5, Insightful)

      by Siberwulf (921893) on Thursday October 23, 2008 @10:52AM (#25482053)
      I'm not in the military, so I'm speaking out of my ass here.

      The last time I checked, you couldn't stop a suicide bomber by throwing a copy of Fedora 9 at them.
    • Ten billion for an operating system... am I the only one thinking that the money we spend on military adventures and bailing out Wall Street would be better spent funding the creation and development of open source software?

      To take the military: Forget, for a second, contemporary specifics of what you may or may not support. But in general, what is your freedom worth? Do you really think that you would still have it if the American military decided to completely disband? How long do you think it would tak

  • But it wouldn't (Score:3, Insightful)

    by 91degrees (207121) on Thursday October 23, 2008 @10:39AM (#25481863) Journal
    Fedora contains a lot of redundancy. throwing in several text editors makes sense if they're already there and free, but you wouldn't rewrite emacs, joe, Vim and nano. You wouldn't rewrite Epiphany, if you'd rewritten Firefox.

    The number's a lot bigger than it needs to be.
    • Re:But it wouldn't (Score:5, Insightful)

      by jedidiah (1196) on Thursday October 23, 2008 @10:49AM (#25481999) Homepage

      Sure you would have "re-written" things.

      Windows has/had 3 major competiting brands of office
      productivity software.

      Perhaps it wouldn't have all be developed by the same
      company, but the products themselves would have been
      developed. This just highlights the fact that a Linux
      distro is no so much just an analog for a copy of
      Windows but it also includes a freeware/commercial
      equivalent of a Simtel or Tucows archive DVD.

      This also exposes the real problem of competing with
      Windows or MS-DOS if you are an alternative OS. You
      not only have to compete with the core OS you also
      have to compete with all of the 3rd party apps.

      I'd be curious what the proposed dollar value of the
      entire Ubuntu software repository "multiverse" would
      be.

    • It was common to have multiple editors in proprietary Unix: ed, ex, vi, pico, etc. In fact, the SUS defines some redundancy, for example, including both sed and awk, when awk could do everything that sed does. When the value of those systems is calculated, they don't reduce the number to account for that redundancy.
    • Re: (Score:3, Insightful)

      by fahrbot-bot (874524)

      ...but you wouldn't rewrite emacs...

      Which existed *long* before Linux was a twinkle in Linus' eye - as did many of the tools used to create Linux (like GCC, and other GNU utilities).

      Not to troll, but if Linux wasn't around, we wouldn't build it from scratch, we'd simply use something else - like BSD, which was also here before Linux.

  • by John Hasler (414242) on Thursday October 23, 2008 @10:43AM (#25481923) Homepage

    > On the balance sheets of Coca Cola and many other huge corporations, you find goodwill
    > listed as a major asset.

    "Good will" is a specialized accounting term when used on balance sheets.

    • Goodwill is an accounting term used to reflect the portion of the book value of a business entity not directly attributable to its assets and liabilities; it normally arises only in case of an acquisition. It reflects the ability of the entity to make a higher profit than would be derived from selling the tangible assets. Goodwill is also known as an intangible asset. [...] The difference between the purchase price and the sum of the fair value of the net assets is by definition the value of the "goodwill"
  • I'm not really sure what they are trying to show with this. I'm sure that MS could go and roll up all of there cumulative costs for XP, Vista, or Windows 7 or whatever and show a worthless number that is much more impressive. And they are able to do it as real costs to them and still make a profit, while employing thousands of people. I'm not real sure what this even includes. Are they counting the source to every package that is built into Fedora, ie emacs, all the gnu utils, etc. Are they trying to point
  • Salary (Score:3, Insightful)

    by RAMMS+EIN (578166) on Thursday October 23, 2008 @10:59AM (#25482181) Homepage Journal

    When reading this, I couldn't help but wish _I_ got paid that much money. The figure I get from sloccount ($55K) seems high, but this is even higher than that! Anybody want to make me an offer?

    • by Shados (741919)

      It depends where you live, as it varies widely across states or countries. My fiancee (girl, who because of the way things are, on average, gets paid less than a guy with equivalent experience) in Boston, straight out of school with no experience (no internship aside for Summer of Code, not a single job on her resume, very average GPA), got her first job at 80000$ USD + bonuses and advantages, and got a 5% raise within 4 months.

      Now, imagine someone with actual experience, consultants, architects, etc that a

  • just as useful as the number microsoft gives me for how much TCO is for linux.

    give me an independent third party.
  • In all seriousness (Score:3, Insightful)

    by JDub87 (1391689) on Thursday October 23, 2008 @11:26AM (#25482505)
    Going by this metric... how much did it cost to develop windows? How much did it actually cost?
  • real cost? (Score:3, Insightful)

    by pak9rabid (1011935) on Thursday October 23, 2008 @01:58PM (#25484773)
    So, if you minus the lines of code that RedHat/Fedora didn't write (upstream projects developers' code), and added in the amount of man-hours associated with packaging/debugging/patching these packages, I wonder what they'd be at.

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