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Research in Motion (NASDAQ:RIMM), which competes with Apple (NASDAQ:AAPL), Nokia (NYSE:NOK) and Motorola (NYSE: MOT) in the smartphone market, recently indicated that the average selling price of the company’s BlackBerry smartphones declined more than expected over the past quarter. Average pricing declined to $299 from around $311 in the previous quarter. We’ve revised our estimate for average pricing in 2010 to now be around $293 compared to our earlier forecast of $303.

We’ve also revised downward our pricing estimates for the outer years of our forecast. The net impact has been a reduction in the Trefis price estimate for RIM’s stock from $76 to $72.

In contrast to our price estimate, RIM’s market price has decreased by about 17% over the last week to around $50 currently, suggesting an opportunity to pick up RIM’s stock if you believe that RIM’s pricing declines will be slower in the future and the company can continue gaining share within the mobile market.

Below we explain why the market may be undervaluing RIM’s stock at current levels compared to our estimate which already anticipates pricing declines and modest growth in smartphone market share.

BlackBerry Pricing Declines Already Factored In

As described above, we had already factored BlackBerry pricing declines over our forecast period and we’ve now further revised downward those estimates to adjust for more than expected pricing declines. We now expect that BlackBerry average pricing will decline from $345 in 2009 to $213 by the end of Trefis forecast period. RIM’s management attributed the steeper pricing decline in Q2 to the delayed launch of higher priced smartphones such as the BlackBerry Bold 9650 and Pearl 3G.

In another article, we discussed that steep price cuts from telecom operators and the price sensitive nature of emerging markets will also be a factor in pricing declines for BlackBerry in the long term.

BlackBerry Share in Smartphone Market to Increase at a Slower Rate

We conservatively estimate that the BlackBerry market share in the global smartphone market will increase from around 20% in 2009 to 23% by the end of the Trefis forecast period. In other words, we expect BlackBerry’s share in the broader mobile phone market (smartphones plus feature phones) to increase from 2.7% in 2009 to 8% by the end of Trefis forecast period.

We expect RIM’s market share within the broader mobile phone market will continue to benefit from the overall shift from feature phones to smartphones. However, given the strong smartphone market share performance of the iPhone and Android-based mobile phones, we don’t expect a significant increase in RIM’s smartphone market share.

The success of BlackBerry’s new OS 6.0 will be crucial if its market share is to exceed our expectations. In another article, we discussed how the new OS is RIM’s attempt to play catch-up with its competitors (primarily Google (NASDAQ:GOOG) and Apple) in terms of features.

Disclosure: No positions