Funambol has delivered an open source email client for the new iPhone, and has won new funding for its bid to offer a free alternative to the Blackberry.

Funambol offers a free open source email server which can take the place of a Blackberry service. The company has client software for around 850 handsets, including one for the new iPhone using the new iPhone SDK, which syncs PIM information with a variety of email systems including Microsoft Exchange. The company offers the software free to businesses, and plans to make its money on the Carrier version which is licensed to operators.

"Blackberry only reaches two percent of the market," said Fabrizio Capobianco, chief executive of Funambol. "Three billion people have SMS, and we'll move them to the next step: mobile email." Even if users will only pay five euros a month for mobile email, that's a lot of potential revenue for operators that take the Carrier version, he says - and he also proposes that consumers will take free ad-funded email.

The Funambol Community edition has a MySQL-style open source licence, and can be used freely: "If you are an enterprise, and you have an Exchange mail server, you can download our server, plug into the mail back end, and start pushing email to all users, not just to the CEO who has a Blackberry," he said. The company does also have a client for Blackberry phones as well, he said.

The company today received US$12.5 million in venture funding from Nexit Ventures, bringing the total invested in the company to $25 million. AOL has adopted the software for synchronisation of its mobile mail services, and it is also used by U.S. provider Earthlink and European ISP 1&q.

The software is also being used by the French parliament, said Capobianco, because MPs wanted to use push email, but did not want all their emails passing through RIM's servers in Canada.

The ad-supported consumer email could pay for itself, says Capobianco, because "if a user gets ten emails a day, each could have a different banner. It's easy to deliver about 30 impressions per day. If the ads are non-intrusive, or even useful, the operator can deliver a very powerful solution, free, but there is still money to be made."

The name Funambol is based on the Latin word for a tightrope walker, because Capobianco says the company is performing a "balancing act."