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IBM has shot back in the escalating war with Microsoft, offering email and collaboration in the cloud.

Big Blue has unveiled a hosted groupware service based on a multi-tenant version of its Domino server, along with pricing that matches cuts made by Microsoft in its Business Productivity Online Services (BPOS) suite a year ago.

The multi-tenant version of IBM's Domino server is called LotusLive Notes, and it targets organizations with more than 1,000 users. It's priced $5 per user each month.

IBM will host LotusLive notes and deliver email, shared calendar, instant messaging, and personal contact services, and they'll reach the desktop through a Notes front end.

This complements the existing LotusLive iNotes service that delivers web email, calendar, and contacts via the browser and is priced $3 per user each month.

Bethann Cregg, Lotus Live services director of product management, told The Reg the new service is being evaluated by "many" customers, including users of Microsoft Exchange.

Exchange users are one category of customer being flipped into users of BPOS by Microsoft - the company's suite includes a hosted version of Exchange.

Last week, Microsoft announced the US state of Minnesota plans to stop running its own Exchange servers and convert to Exchange email, SharePoint Collaboration, Live Meeting, and messaging with Office Communication Server in BPOS, planning to save $800,000.

On Monday, Microsoft also said that DuPont, Spotless Group, and Sunoco have moved to BPOS.

DuPoint is dumping Notes in its move to BPOS for 58,000 employees - a significant twist that Microsoft will be crowing over. Microsoft and IBM have long fought to shove each others' systems out of customer accounts, and the cloud has given this decades' old battle a fresh lease of life.

In Microsoft's fourth-quarter, 70 per cent of Microsoft's cloud strategy wins were new customers switching to BPOS from Notes in addition to Novell and other email systems according to chief operating officer Kevin Turner. Microsoft's COO has made it clear his dream is to see nothing less than Notes eradicated from entire regions and replaced with Exchange.

IBM is countering the BPOS onslaught with LotusLive iNotes and Notes, using features and price. For instance, It claims the hosted version of its suite provides integration and familiarity with the desktop and server versions so you can easily move documents, messages, and content between both.

Familiarity of experience is surely table stakes in this game, so the biggest factor for any discerning customer will be price. And here we're talking actual price, never mind any deals Microsoft or IBM cut to land flagship accounts like Minnesota or DuPont.

Lotus' LiveNotes' price matches Exchange Online's $5 per user per month, a price introduced in November 2009. IBM's also announced a $10-per user per month bundling the LotusLive offerings of email, calendaring, scheduling, IM, group profiles, and other services. The online apps are integrated and can be accessed through a single dashboard.

A year ago, Microsoft also set its BPOS bundle - SharePoint Online, Exchange Online, Communications Online and Live Meeting - at $10 per user each month from $15.

With price coming out flat, IBM's going to squeeze Microsoft on what you get - or don't - for your BPOS license. To use Exchange Online, each person must have a user subscription license (USL) that provides the rights to use the online service as a subscription. You can purchase a license via Microsoft's Online Services Customer Portal.

Microsoft's online apps are designed to make money for the franchise and the company's giving nothing away for free or in a way that could seed the market. Elsewhere, you need a license of Office 2010 before you can use the browser-based version of Office - Office Web apps.

IBM's offering gives you the ability to invite people in to use LotusLive Notes as guests - without need for an additional license, albeit with limited functionality. Online storage is limited compared to full-time users and you don't get access to all the services.

"IBM has taken down the barrier for you to use rich collaboration tools with people not only inside your company but also with people outside the company," Cregg said. ®

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