So you gotta wonder whether Research in Motion's lighter than expected Blackberry sales and subscription sign-ups are a sign of sluggishness in the smart phone sector? Or whether this could be a sign that Apple's

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[AAPL  Loading...      ()   ] iPhone is starting to chip away at RIM's success in the marketplace.

CNBC.com RIM Earnings

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[RIMM  Loading...      ()   ] reported a better-than-expected 98 cents a share versus the 94 cents that analysts were expecting. That news came on in-line revenue of $3.42 billion.

So the good news for RIM is that it apparently is transferring more of its topline to the bottomline, and that normally would be good news for investors. There's also good news on the gross margins side of things with RIM reporting an in-line 43.6 percent.

But the problem is that RIM shipped only 7.8 million BlackBerrys during its first quarter against the 8.3 million expected; and the company reported 3.8 million new subscribers versus the 4.2 million anticipated. Both numbers being lighter than expected is a real surprise.

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Guidance is also a little disappointing, and that too is a surprise. RIM now offers a new EPS range of 94 cents to $1.03. Consensus was at 96 cents. Revenue will be light as well, expected now between $3.45 billion and $3.7 billion.

Wall Street was looking for something closer to $3.6 billion. And new subscriptions are a real disappointment, with the company anticipating 3.8 million to 4.1 million against the 4.2 million analysts projected.

• CNBC.com's Earnings Central

Generally, these numbers would be considered OK, but after the run-up in RIM shares these last few months, with the stock nearly doubling since March, the pressure was on the company to report something special in order to keep that momentum going.

Still, as I have written before, the RIM story -- indeed the entire smart phone sector story -- reaches far deeper than one quarter of earnings headlines. Smart phones represent a tiny fraction of the overall cell phone handset market and the opportunity for multiple winners is clearly there.

• CNBC.com Technology Page

The more important item for investors to digest, and we'll know part of the answer when Apple and AT&T and market research offer up sales figures for the first weekend of iPhone 3GS sales on Monday, is whether more consumers are migrating to iPhone and away from Blackberry. We'll have to wait for unit sales from Apple when the company reports its earnings later in July.

If Apple can beat sales expectations for iPhone, amid a unit and subscription disappointments from Research in Motion, the fall-out could be seismic: great for Apple, troubling for RIM. Again, everything's relative. Both companies are doing phenomenally well in the marketplace, and their stocks, over the next year, should reflect that.

Today's RIM sell-off is significant, and follows a major run in these shares over the past several months. But with a smart phone market growing the way it has, with 13 percent growth in May alone, these shares should recover nicely, and make RBC's target of $100 still very realistic indeed.

Questions?  Comments?