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RIM Signals Start of Smartphone Bonanza

By Anders Bylund – Updated Apr 6, 2017 at 12:02AM

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What recession? Consumers are lusting for fancy phones like never before.

The smartphone wars are far from over. In fact, they have only just begun.

That's the takeaway from Research In Motion's (NASDAQ:RIMM) stellar third-quarter results. The BlackBerry maker surpassed 10 million units sold in a quarter for the first time, and that translated into 41% stronger sales year over year at $3.9 billion. Some fiscal restraint and efficient manufacturing allowed the growth to expand as it trickled down the income statement; earnings increased 59% over the year-ago period to $1.10 per share.

Management explained the surprise with generally strong demand for smartphones, especially in the consumer sector, where the BlackBerry is making inroads after years of myopic focus on the enterprise market. New models like the Storm 2 and Bold 9700 are selling like hotcakes, both at service providers like Verizon (NYSE:VZ) Wireless and Vodafone (NASDAQ:VOD) and consumer-oriented retailers like Best Buy (NYSE:BBY) and Wal-Mart Stores (NYSE:WMT).

And the bonanza is expected to continue. RIM added 4.4 million net new subscribers this quarter, and plans to sign up at least that many in the next quarter. The fact that 10 million units sold converts to 4.4 million new customers is a sign of repeat business, which in turn shows the strength of the BlackBerry brand.

You might think it's bad news for the competition that RIM sold so many BlackBerry phones this quarter, including lots of the Verizon-exclusive Storm 2. I disagree. Verizon's full-court press to sell the Motorola (NYSE:MOT) Droid and its little sibling, Droid Eris, is bound to have produced plenty of sales. And that didn't kill the demand for the consumer-oriented sales at all.

In other words, I expect both Motorola and Apple (NASDAQ:AAPL), among others, to show great smartphone sales over the holidays. This market is just now growing into its considerable promise, and the only way is up. It's a bad time to specialize in plain old "feature phones," but a downright awesome time for the smartphone specialists.

Which phone designer is winning the smartphone wars in your opinion? The comment box below is dying to see your txt msg.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Apple and Best Buy are Motley Fool Stock Advisor recommendations. Best Buy and Wal-Mart Stores are Motley Fool Inside Value recommendations. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

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Stocks Mentioned

BlackBerry Stock Quote
BlackBerry
BB
$5.07 (-3.24%) $0.17
Walmart Stock Quote
Walmart
WMT
$130.06 (-2.50%) $-3.33
Apple Inc. Stock Quote
Apple Inc.
AAPL
$150.43 (-1.51%) $-2.31
Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
BBY
$68.78 (0.31%) $0.21
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$39.52 (-1.03%) $0.41
Motorola Solutions, Inc. Stock Quote
Motorola Solutions, Inc.
MSI
$228.76 (-1.41%) $-3.26

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