The company added 705,000 new BlackBerry subscribers during the usually slow second quarter, while revenues grew 34% to $658.5m. Business has never been better, said RIM co-CEO Jim Balsillie, on a conference call.

Part of the reason for the strong show was the company’s new BlackBerry Pearl, launched in the US earlier this month, Balsillie said. New subscribers at T-Mobile were significantly higher after Pearl was released, he noted.

Balsillie also said that he expects greater demand in the future, as carriers likely will lower their BlackBerry in the near future in order to spur demand.

After all, a BlackBerry subscriber generates on average five to six times the profitability of a regular cell phone subscriber to a carrier, he said. But data option rates for a lot of plans maybe haven’t been what a lot of these carriers have been looking for so they are actively looking at lower prices to boost their overall profit margins, he said.

RIM shares shot up more than 19.7% to $103.05 in after-hours trading on the Nasdaq after the company posted its earnings.

RIM now has about 6.2 million total subscribers, of which about 26% are outside North America.

But RIM’s undisputed market leadership in the enterprise market is by no means guaranteed, according to a report by IDC, also released yesterday. After nearly eight years at the top, RIM is being challenged as other vendors emulate its offerings, IDC reckons.

Microsoft’s involvement with Motorola, Palm and others, as well as Nokia’s commitment to an end-to-end strategy will threaten to weaken RIM’s stronghold in the enterprise market, said IDC, in a statement. IDC pointed to the Motorola Q and Nokia E61 as high-profile devices intended to generate buzz and to resonate with business users.

Several BlackBerry clones have previously attempted to challenge RIM’s reign in the enterprise market, but this is a more formidable strike, said Sean Ryan, IDC mobile markets research analyst.

The timing is right for a more powerful attack against RIM’s BlackBerry as competitive forces converge, Ryan said. Nokia is offering an end-to-end solution of its own, while Motorola and Palm, among others, are leveraging Microsoft’s Windows Mobile 5.0 and Microsoft Exchange.

Microsoft is the key partner that gives rival device vendors such as Motorola, HTC, Samsung and Palm the ability to attack the core BlackBerry user base, IDC said. What’s more, Microsoft is ramping up IT policy support and hopes to exploit its dominant IT enterprise position with Windows OS and Microsoft applications, said the researcher.

Indeed, IDC expects these Windows Mobile-supported devices to undergo the fastest growth, reaching 32.3% of the market by 2010.

But Basillie balked at such suggestions, which he characterized as competitive misinformation.

I think one has to understand that most of these companies that are mentioned are bringing their A game or best game to this space for over an a decade, he said. So this kind of competitive reality has been there from the beginning … if it was so easy, then why did not all these best efforts derail us from the beginning?

The company posted a $140.8m profit, or 74 cents a share, up from $111m, or 56 cents, a year ago. Before items, including $4.3m stock option expenses, RIM reported a 77-cent profit, which blew past analysts’ average forecasts of 71 cents on revenue of $643.6m.

However, the results were just preliminary because of a potential restatement related to past stock option grants. RIM CFO Dennis Kavelman said he expects any potential effect on gross earnings and operating results of any restatement would be immaterial in fiscal 2007.

Balsillie also noted that the company’s internal review of its historic stock-option grants to workers was voluntary following the discovery of accounting errors from its audit committee for options granted from fiscal 1998 to the present.

During the recent quarter, the breakdown of revenue was as expected: handhelds drove about 72% of its quarterly revenue, while services accounted for 19% and software for 6%. Kavelman said

The company’s BlackBerry Connect software, which enables other mobile device to use BlackBerry’s push email, is gaining some momentum, Kavelman said, but declined to break out subscription numbers. The numbers are starting to get larger and more meaningful, he said.

Looking ahead, RIM forecast revenue in the current quarter from $780m to $820m, with earnings of between 88 cents and 95 cents a share. And the Waterloo, Ontario-based company expects to garner about 800,000 new subscribers during the period.