After losing the No. 2 spot to Chinese rival Baidu in the second quarter, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google just slipped even further in the smart speaker market, according to estimates released this week from market researcher Canalys. Amazon.com held on to its top dog status, thanks to Prime Day promotions combined with a new Echo Upgrade Program that Amazon introduced recently.

The overall market continues to enjoy stellar growth, with total units jumping 45% to 28.6 million in the third quarter. Too bad Google missed out on that upside.

Echo Studio on a cabinet next to small potted plants

Echo Studio. Image source: Amazon.

Amazon extends its lead

Chinese companies like Alibaba and Baidu saw strong growth after China overtook the U.S. as the largest smart speaker market in the world earlier this year. Amazon extended its lead -- it was only ahead by 2.1 million units in the second quarter -- by a significant margin, while Google saw its shipments plunge by 40% in the third quarter.

Vendor

Q3 2019 Shipments

Q3 2019 Market Share

Growth (YOY)

Amazon (NASDAQ:AMZN)

10.4 million

36.6%

65.9%

Alibaba (NYSE:BABA)

3.9 million

13.6%

77.6%

Baidu (NASDAQ:BIDU)

3.7 million

13.1%

290.1%

Google

3.5 million

12.3%

(40.1%)

Xiaomi

3.4 million

12%

77.7%

Others

3.6 million

12.5%

44%

Total

28.6 million

100%

44.9%

Data source: Canalys. YOY = year over year.

Google's decline follows a 20% drop in shipments in the second quarter, according to Canalys. Alibaba was No. 4 in the second quarter but has leapfrogged both search giants to become the No. 2 vendor. Alibaba took advantage of various retail partnerships to help boost sales of its Tmall Genie gadgets, Canalys notes. For example, Starbucks and Alibaba collaborated to launch voice ordering on Tmall Genie speakers in September.

"Amazon introduced the 'Echo Upgrade Program' to entice users to trade-in old Echo or non-Echo Bluetooth speakers to further increase Echo device penetration in the household," Canalys analyst Jason Low said in a release. "The challenging retail environment and shipment decline compelled Google to seek more partnerships such as with Spotify, to drive sales through different channels."

Amazon refreshed its Echo lineup at the tail end of the quarter, with Google hosting its annual "Made by Google" event in October shortly after the quarter closed. Google only had one new smart speaker: a refreshed and rebranded Nest Mini.

Echo Show 5 on a nighstand

Echo Show 5. Image source: Amazon.

Smart displays, a subcategory of smart speakers, are taking off. Unit volumes skyrocketed by 500% worldwide to hit 6.3 million units. Amazon's Echo Show 5, which was released over the summer, was particularly popular thanks to its smaller size and affordable price point. Baidu launched its Xiaodu Smart Display in February, and smart displays now account for over 60% of the company's unit volumes.

"The Echo Show 5 smart display contributed significantly to Amazon's success in Q3, making up 16% of Amazon's overall global shipments and it became the best shipping smart display of all the brands," according to Canalys analyst Cynthia Chen. "Despite smart displays gaining importance in vendors' strategies, consumer price sensitivity and pragmatic use cases remain key challenges to be solved."