IBM launched a social networking site resembling MySpace , but for businesses, yesterday. Analysts said this strengthens IBM's challenge to Microsoft .

Lotus Connections, as the site has been named, will be the business equivalent of popular online meeting places such as MySpace, according to Reuters .

It will offer office workers networking opportunities similar to those on MySpace. Users can share information via the site, but businesses will have control over who sees what data. It will also have search and bookmark functions.

Lotus Connections combines five components: member profiles, activities, blogs, communities and 'dogear' - IBM's term for the way users identify and share web bookmarks with colleagues.

Tracks discussion topics

The networking tool also uses tags to help users track popular discussion topics and figure out who may have knowledge on any subject.

Users can set up informal groups to collaborate on projects, storing relevant documents, e-mails and URLs together. Each user can publish blogs to share ideas with colleagues.

Peter O'Kelly, a software expert with Burton Group , told Reuters the new software from IBM will shake up a market dominated by Microsoft.

"This is going to rekindle the competition between Microsoft and IBM," O'Kelly said. "I think IBM is playing offence here."

Could reduce Microsoft's market lead

He added that IBM's Lotus Connections could reduce Microsoft's lead in the collaboration and e-mail messaging market. The situation was the opposite five years ago when Microsoft's Outlook and SharePoint collaboration software started to surge past rival IBM products.

"What Web 2.0 has demonstrated is that self-defining communities often do a better job of locating relevant information," IBM software chief Steve Mills told Reuters.

"This helps with the rapid identification of expertise and experts," Miller said.

Lotus Connections will serve as an add-on to existing IBM software such as Lotus Notes, and IBM's instant messaging system for businesses, Sametime. It will also work with Microsoft's rival database, e-mail and web software.

Lotus Connections is set to become available in the first half of this year. Pricing is yet to be confirmed.