AOL

As the country's largest Internet access provider, AOL has two main claims to fame. It turned "You've got mail!" into a catchphrase so popular that it was used as the title of a 1998 romantic comedy starring Tom Hanks and Meg Ryan. And in 2001 it orchestrated the most grandiose—and ultimately the most disastrous—merger of the dotcom era when it acquired the world's biggest media company, Time Warner, in a stock deal valued at $106 billion. The following year, after the Internet bubble burst and investors fled Internet-oriented stocks, AOL Time Warner recorded the largest quarterly loss in U.S. corporate history: $54 billion.

AOL traces its roots back to the early days of dial-up connections, when a company called Control Video Corporation began using phone lines in 1982 to transmit primitive video games to Atari enthusiasts via the company's proprietary television set-top boxes. The following year, a young marketing executive named Steve Case left his job testing new toppings for Pizza Hut to join Control Video. Case started building an online-services division that catered to users of Commodore and Apple personal computers.

A few years later, the firm changed its name to Quantum Computer Services, and in 1989 launched a nationwide service that greeted subscribers with an exuberant audio "Welcome!" This and other voice messages—including the famous "You've got mail!"—were recorded by the broadcaster—husband of one of the company's customer service reps. Americans started flocking to the dial-up service to e-mail one another, send instant messages and, after the company published the first-ever "emoticon" dictionary, use punctuation marks to add emotional nuance to their online banter.

In 1991, Case became president and CEO, and the company changed its name to America Online. In 1993, it sent out a mass-mailing of 250 million free software disks—designed to make it supremely easy for computer-phobic Middle America to start going online—and within a year tripled its membership to 1 million. America Online quickly became the leading Internet service provider and struggled to handle the surging demand: dial-up users who frequently encountered busy signals nicknamed the company America On Hold. In 1995, AOL made its first expansion outside the U.S.—in Germany—and by 1997 had more than 10 million subscribers worldwide.

The hard-charging company gobbled up its top competitor, CompuServe, in 1998 and a year later acquired Netscape, which had been the leading web browser until it was outpaced by Internet Explorer, a Microsoft offering that was widely used in conjunction with Microsoft's own Internet service. In early 2001, shareholders and regulators approved AOL's merger with Time Warner, but the honeymoon didn't last long. As Internet portals Yahoo! and Google began attracting users with free e-mail accounts, America Online was hit by a slowdown in online ad revenue and subscriber growth—worldwide membership peaked at 35 million in 2002—which triggered layoffs and a series of upheavals in upper management. Time Warner dropped AOL from the parent company's name in 2003—the same year Case resigned as chairman—and in 2004 paid the U.S. government $510 million to settle an investigation into AOL's accounting for several business deals.

As more and more PC users ditched their dial-up modems for much faster broadband connections, AOL tried to hold on to subscribers by beefing up its proprietary content, offering such online exclusives as pop concerts, movie trailers and news clips. But Google and Yahoo! continued to attract more eyeballs and accompanying ad dollars. In 2005 America Online made the content on AOL.com free to non-subscribers. A year later it all but abandoned its old pay-to-play strategy when it started giving away e-mail accounts to broadband users. Announcing this change, Time Warner president and chief operating officer Jeffrey L. Bewkes amended AOL's once-ubiquitous tagline to "You've got mail—for free!"

Despite a reputation for being slower to adapt than its rivals, America Online—which officially changed its name to AOL in 2006—was still the leading Internet service provider in the U.S. as of November 2006. In conjunction with its partner Time Warner Media sites, it has the third largest Web audience in the country as measured by unique visitors, ranking behind only Yahoo and Google, respectively. With the spotlight on whether AOL can continue its impressive growth, speculation remains high that Time Warner will eventually spin off the online unit. But at an investor conference in December 2006, Bewkes indicated the parent company saw plenty of potential in AOL. "There is too much upside," he said, "for us to [sell it] right now."

—By Julie Rawe