Yahoo has inked a deal with Taiwanese computer maker Acer to distribute a co-branded browser toolbar and browser start page as well as to make Yahoo the default search engine on all of the computers sold by Acer around the world.

The multi-year agreement, announced Wednesday, will give Yahoo prime placement as it escalates its battle against Google. In May, Google announced a deal with Dell to include its toolbar and desktop search software on Dell computers, and set the browser to default to its search engine (see Google Goes on Dell PCs).

While Dell remains the No. 1 computer maker, Acer is in fourth place overall, and it has been gaining strength in several areas.

According to Gartner Dataquest, in the second quarter, the Taipei-based PC maker was the No. 3 notebook vendor worldwide, No. 1 in EMEA (Europe, Middle East, Africa), No. 3 in Asia Pacific, and had the largest year-over-year growth in the United States.

Acer will begin shipping PCs with the co-branded toolbar and start page on October 1 in Asia Pacific, Europe, North America, and South America.

The two companies also plan to develop localized, country-specific toolbars and start pages in Brazil, Canada (English and French), France, Germany, Hong Kong, India, Italy, Korea, Mexico, Spain, Taiwan, the United Kingdom, and the U.S. (English and Spanish).

Yahoo’s “global coverage with strong local engagement perfectly match Acer’s company strategy,” Acer President Gianfranco Lanci said in a statement.

Yahoo COO Dan Rosensweig said the relationship would give Yahoo “the ability to offer our services to Acer’s global customer audience.”

Financial terms of the deal were not disclosed. Despite the news, Yahoo shares fell $0.13 to $29.04 in recent trading.

Fending off Vista Search

The co-branded browser start page will offer Yahoo content, such as news and links to Yahoo Music and Yahoo Sports. A Yahoo Personal Assistant will offer access to Yahoo Mail, Yahoo Messenger instant messaging service, and Yahoo Local information.

The start page will also contain direct links to specific Acer customer services. An Acer module will offer information on Acer news and products.

Once Microsoft begins shipping Internet Explorer 7, Acer will also set Yahoo as the default search engine for IE7 on all of its computers.

With the Windows Vista operating system expected to ship to consumers in January, Yahoo is positioning itself to fend off challenges from not only Google, but also Microsoft’s own search engine.

“While Yahoo has clearly not been as aggressive as Google in seeking out distribution partnerships, we believe Yahoo is smart to form default search and toolbar distribution partnerships, particularly ahead of the Microsoft Vista rollout,” wrote Thomas Weisel Partners analysts Gordon Hodge, Lloyd Walmsley, and Christa Sober Quarles in a research note.

They view Acer as an attractive partner for Yahoo because the deal helps address Yahoo’s relatively weak competitive position in Europe, as well as most parts of Asia outside of Japan.

Email Upgrade

In separate Yahoo news, the portal upgraded its Yahoo Mail service on Thursday with a new look and feel it has been testing for about a year.

The new version includes message preview features, an RSS (really simple syndication) reader, and links to the Sunnyvale, California-based company’s online calendar. It resembles desktop email systems like Microsoft Outlook as opposed to the web-based look of old.

The email system will be available to users in the U.S. and 17 other countries.

Contact the writer:MCohn@RedHerring.com

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