Competitors analysis is an very important part of SEO (Search Engine Optimization) Process. By analyzing one's competitors work, one can easily set their targets. What are the keywords that your competitor targeting? What are the process that they are adopting for optimization? How is their website interface getting engaged visitors to increase time of visit and reduce bounce rate? The most important thing is to analyzing SEO efforts of one's competitors, they put to get their websites ranked over search engines.
There are so many online tool to analysis competitors now a day. You can use tools like Traffic Estimator, Alexa, Yahoo Site Explorer Tools. You can use some free tools provided by SEOCHAT.COM too for Keywords Density Analysis, Class C Checker etc. However I like to use ip-report.com for finding ips report of any site here one can get ip and class c of 50 sites at a single attempt.
In next edition I will tell you how one can analysis competitors using google.