IBM has turned Lotus Notes into a fluffy hosted service called Lotus Notes Hosted Messaging as it's been threatening to do.

The move sorta catches IBM up to Microsoft with its $10-a-head-a-month Exchange Online.

Big Blue is targeting its new Gmail-like service at companies with 1,000-10,000 employees for a Microsoft-competitive $8-$18 a head a month and says it can tailor the software and service plans to smaller - and larger - companies too.

It's particularly interested in retail, global manufacturing, and insurance companies.

For the money IBM will be hosting the software and user data on its own virtualized infrastructure, relieving customers of having to buy, support and power the underlying hardware and software, a premise expected to be a persuasive argument in these dour times.

However, there's apparently 1GB limit on each user's mailbox and the widgetry can't support applications yet.

IBM is offering two service-level agreement options: spam and virus filtering and back up and restore services. It's promising either 99.5% or 99.9% uptime.

IBM notes that it's also pushing into cloud services with Sametime Unyte web conferencing software and its newfangled SaaS Bluehouse extranet collaboration service.

It's also been pushing Lotus Notes and Domino into markets such as iPhone, social networking and unified communications clients.

Lotus Notes is IBM's most widely used software and along with Domino has, by IBM's count, 140 million licensed users worldwide, including more than half of the largest 100 corporations in the world, and 80% of the top 10 global companies in banking, telecommunications, aerospace and defense, consumer products, electronics, insurance and pharmaceuticals.

Lotus Notes 8.5 is currently in beta.

IBM says Global Hyatt was going to use Domino and Sametime collaboration and unified communications software for its 365 hotels worldwide. No value was put on the deal.