IBM is set to launch its first hosted Lotus Notes service for as low as $8 (£5) a month, per user, as it attempts to compete with Microsoft's hosted Exchange messaging service.

In an email, IBM spokesman Mike Azzi called the new hosted Lotus offering "a big move for us to capture broader market share." At its lowest price, a full year of hosted Lotus Notes would cost less than $100 per year for users, he said. This figure was lower than Microsoft's price for its competing hosted Exchange service, which was $10 per user, per month.

Microsoft plans to make Exchange Online available by the end of the year as part of a hosted services push. However, the company also plans to offer a full suite of business productivity hosted services that includes Exchange Online, Office SharePoint Online, Office Communications Online and Office Live Meeting for $15 per user, per month.

IBM will divulge more details about the new Lotus hosted service in a news release on Wednesday. An IBM Lotus executive said publicly in September that it would offer a Notes hosting service to cater to companies with between 1,000 and 10,000 employees, which IBM considers the midmarket. He said the offering would be priced between $8 and $18 per seat, per month, but did not offer more specifics.

Lotus and Exchange have competed head-to-head for years as messaging software for business customers, with each company claiming it has punted the other out of a customer account on a regular basis. However, with competitor Google now offering business customers cloud-based e-mail and collaboration applications, both IBM and Microsoft have been forced to take their infrastructure software into the hosted realm.

Microsoft has been offering a hosted version of its Exchange Server for several years, but Wednesday will mark the first time IBM is offering Lotus Notes, its most widely used software product, as an online service.