The e-m@iler is still taking a chunk out of Amstrad's wallet, more than three years after the Internet phone first went on sale -- but profitability may finally be close.

Amstrad announced on Thursday that its Amserve business, which is responsible for the e-m@iler, made a pre-tax loss of £6.1m in the twelve months to 30 June 2003. This loss, Amstrad explained, is the result of a business strategy where each e-m@iler unit is sold at a loss, with Amstrad then generating revenue as users pay for services.

Two versions of the e-m@iler exist. Amstrad's original model, a stand-alone desktop phone with a keyboard and a screen that let a user send and receive emails, was launched in March 2000. This was followed by an second, more powerful version which also boasted a Web browser, a credit-card reader and Sinclair ZX Spectrum games.

Amstrad revealed that a total of 255,000 e-m@ilers have now been sold -- 125,000 of the original model and 130,000 of the updated one. This means that Amstrad never came close to achieving company chairman Alan Sugar's target of seeing "1 million e-m@ilers installed in British homes" by 2002.

E-m@iler users pay to access their email and to surf the Web. Amstrad says that e-m@iler revenue is currently running at £18,000 per day, or £6.6m annually, and it's confident that this will increase.

"With the increasing e-m@iler base, we are now attracting more big brand advertisers such as AOL and O2 who promote their products and services on screen," explained Sugar in Amstrad's full-year results statement.

Sugar added that the Amserve division should hit profitability in the current financial year, and that a third version of the e-m@iler is imminent.

"A new variant of the e-m@iler with additional revenue-earning functionality will be launched later in the current financial year. We expect that the Amserve business should turn into profit in this current financial year despite our continued policy of subsidising the sale of units to increase the installed base," Sugar explained.

Overall, Amstrad made a pre-tax profit of £3.8m for the year to 30 June, on the back of a strong performance by its digital set-top box division.