Morgan Stanley’s conservative estimate pegs Apple Watch first year shipment to 30M units

18-Karat Gold Apple Watch

In a investor note published by Morgan Stanley today, the company said that the Apple Watch will blow past Wall Street’s expectation, which has led the company to raise its financial estimates for Apple.

According to the report, smart watches will witness a growth that would be faster than smartphones and tablets, with all OEMs shipping a cumulative 530 million smartwatches by 2020 at the very minimum, or a staggering 1 billion units if the market explodes. The investor note also estimates that Apple will roughly sell around 30 million units of Apple Watch in the first year of its launch, but notes that this is still a conservative estimate.

It also suggests that owners of nearly 10% of iPhone 5 or later devices will end up buying the Apple Watch. While this is a lower penetration figure than the iPad, it is still higher than the 7% penetration of the iPhone, which was marred by its limited carrier availability and high contract price.

“Our 30M unit estimate implies 10% penetration into Apple’s 315M iPhone 5 or newer installed base exiting 2014, which is lower than iPad penetration of 14% in its first year but higher than iPhone at 7%. However, the iPhone was constrained by limited carrier distribution and a more expensive two-year service contract.”

Morgan Stanley makes this estimate looking at the iPad launch as a history. While many analysts expected the device to ship only 5 million units in its launch year, Apple went on to ship 15 million units of the iPad in 2010.

Apple has not yet confirmed the final release date of Apple Watch, though the company’s SVP of retail head Angela Ahrendts recently told its employees in a leaked internal memo that the device will launch in Spring 2015.