Smartphone race to pricing bottom underway, says IDC

Smartphone units are expected to hit about 1.7 billion units by 2017, but average selling prices are set to steadily decline, according to IDC data.

IDC projected that global smartphone units will pass the 1 billion mark in 2013, up 39.3 percent from 2012.

Smartphones, which are increasingly replacing feature and dumb phones, are expanding into emerging markets at lower price points courtesy of Android. Android has allowed more manufacturers to enter the market, but those device makers are also looking at ever-shrinking profit margins---unless you're Apple.

The average selling price projections tell the tale. In 2013, IDC sees average selling prices of about $337, down 12.8 percent from 2012. In 2007, smartphone average selling prices will be $265.

These projections are one reason that Apple's iPhone 5s and 5c launches drew critics at first. The 5c was supposed to be Apple's emerging markets play, but the company preserved pricing and profit margins instead. It remains to be seen if Apple's move will look like a strategic blunder in the years ahead.

Here's a look at IDC's volume and price forecasts. The one thing that sticks out is that IDC is betting that North America average selling prices for smartphones actually increase over the next five years. That bet is likely to be wrong since I'd expect consumers to push back and go to cheaper devices even with the two-year contract model pushed by carriers.