It is no secret that AOL has been under the microscope of Wall Street, Main Street, and even Silicon Valley. There has been growing talk that a deal could be in the air, and talk may ultimately lead to reality. The New York Times notes that Time Warner Inc.'s (NYSE: TWX) CEO Jeff Bewkes may be open to a deal or "whatever configuration makes it the strongest and the most valuable."

AOL's primary strategy is to expand its advertising on Platform A, which is a combination of advertising and technology companies that AOL has purchased over the years. Executives see the expansion of their advertising network as the only way to compete and have discussed spinning off the dial-up portion of the business.

Two years ago, Time Warner discussed a merger with AOL and Microsoft Corp. (NASDAQ: MSFT) for its online operation and has recently explored a potential deal of some sort with Yahoo! Inc. (NASDAQ: YHOO). Keep in mind, Google Inc. (NASDAQ: GOOG) owns a 5% stake in AOL, so the world can still change rapidly.

Many feel that as AOL continues to struggle to compete, a deal could be the only way to stay afloat. That might be a stretch or it might not. This really boils down to each user preference out there. AOL and Yahoo! both have their loyalists. Google (NASDAQ: GOOG) definitely has its loyalists. Owning multiple digital properties is very attractive to some, while others disagree. Even Ask Jeeves, which is now just Ask.com, currently owned by IAC/Interactive (NASDAQ: IACI), has its loyal users. It's just a much smaller base.

My own take is that this is not a question of "staying afloat" as many write. The current barriers that exist are really a matter of size and scale. Even though a billion dollars isn't what it used to be, when you start putting $20 billion and $30 billion valuations on properties, it starts limiting the choices of how you do a deal and particularly with whom you do a deal. It's about staying massive and dominant, which is a different issue entirely.