Not sure if it is viable, but Google has been doing it for some time with Android. The open-source version is free, and if the manufacturer includes the various Google Apps on top, they get a cut of the ads revenue.

I don't know that it is true 'inverse licensing', as nobody has ever disclosed the amount or structure of the deal.

I assumed it was an up-front deal which is more than covering the cost of Nokia getting the OS onto their hardware and maybe covering some cost of x-number of minimum handset licenses. Beyond that amount, I would think that Nokia would be paying microsoft per handset.

Not for a startup of course, but Microsoft sees this as an investment in business development. MS wants Windows to be a solid mobile platform, and they're pouring a bunch of money into the Nokia deal to increase the availability of Windows Phone 7 handsets. It's the chicken-and-egg problem that effects so many things; a platform can't be successful without software to run on top of it, but no one will develop software for a platform that isn't successful. This problem is much less hard when you have a ton of money and can just pay people to use your platform, which is what MS is doing here.

It's not much different than pouring a bunch of money into advertising; if you have a big partner like Nokia, it not only generates a lot of PR buzz, but it also means that since Nokia makes a lot of phones, there will be a lot of WP7 phones out soon, which is what Microsoft wants.

It is if you get 30% of sales on that platform.