Amstrad harks back to old glories with internet upgrade for e-m@iler

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Sir Alan Sugar launched the follow up to his much ridiculed e-m@iler phone yesterday – six months behind schedule. But even as he was setting his plans to sell 250,000 of the machines this year, aided by an £8m advertising campaign, analysts were marking down their profit forecasts for his company, Amstrad.

The new £100 unit adds a web browser allowing the user to surf websites as well as providing access to online shopping. Those old enough to remember the Sinclair ZX Spectrum – the best-selling computer of 1982 – will also be able to download and play games written for it as Amstrad owns the intellectual property.

Speaking at the launch, Sir Alan said: "The killer application is still e-mail, although we don't know if we're going to create some sort of hysteria among kids who will rush out to buy and download games on these."

The e-m@iler Plus had been planned for last September. "We didn't because of, well, aggro – chips, software, those sort of things," he said. That meant, though, that the company missed the Christmas selling period.

City analysts now reckon that Amstrad will only break even, or make a small loss this year – a far cry from its 1980s heyday, when it had 25 per cent of the European PC market. It hit its peak in 1988, with profits of £160m and a market valuation of £1.2bn.

Other factors may also work against it. Although all 110,000 of the original e-m@ilers were sold those using the old version will not be able to move their existing e-mail address to the new version before next year, thwarting existing users looking to upgrade. Plus, the screen is monochrome.

Analysts also wondered who will buy them, given that 60 per cent of households already have a PC. "I think it would go to households with a low technology threshold – people who aren't comfortable with setting up a PC," said Jason Armitage of the research company IDC.

Amstrad makes money on the e-m@iler because it costs 12 pence to go online and send or receive e-mail; over a year, the company gets roughly £100 per customer in telephone charges.