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Linux Business

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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  • 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.

  • Re:I'd rather see... (Score:5, Informative)

    by mentaldingo (967181) on Thursday October 23, 2008 @10:17AM (#25481561) Homepage
    RTFA. It said $1.4b for the kernel alone.
  • by qwertphobia (825473) on Thursday October 23, 2008 @10:33AM (#25481761)
    Nope... but the Phillies got you a free taco last night!
  • 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.

  • by Otter (3800) on Thursday October 23, 2008 @10:53AM (#25482077) Journal
    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 Sockatume (732728) on Thursday October 23, 2008 @10:53AM (#25482079)
    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 Anonymous Coward on Thursday October 23, 2008 @10:54AM (#25482083)

    Actually, the Rays did. Taco Bell gives everyone a taco for a stolen base. It was a Rays player who stole a base last night.

    Go Phils!

  • Re:Average salary? (Score:3, Informative)

    by gad_zuki! (70830) on Thursday October 23, 2008 @10:55AM (#25482105)

    Buy a smaller house or condo. 30% down? Usually its 20%. The housing in your area sounds a tad overpriced to me or your example is just another case of living beyond one's means.

    Lastly, home purchasing in the US is priced for couples, not individuals.

  • 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.

  • Re:Average salary? (Score:3, Informative)

    by Pantero Blanco (792776) on Thursday October 23, 2008 @12:08PM (#25483125)

    I'm gonna have to call "shenanigans" on your $$ figures there. According to this [trulia.com] it would appear there are plenty of homes one could buy that are FAR less than your supposed $625K "median" price.

    That's the wrong point to make. Half of the homes (give or take half of a house) would be under the "median price", in either case. Unlike the mean, how far some go above or below it doesn't affect it. If the prices were $5, $5, $5, $60000, $80000, $80000, and $85000, $60000 would be the median.

    You do appear to be correct about his first figure (the "bad place in the Bay" being wrong, though.

    A total of 7,271 new and resale houses and condominiums sold last month in the nine-county region, marking a 0.5 percent uptick from August. The median sales price fell 36 percent from a year earlier to a five-year low of $400,000, MDA DataQuick said.

    $400,000 / .64 = 625,000. It did "hit" 625K, evidently, but certainly isn't there any more.

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