Thanks to its popular AirPods, Apple (NASDAQ:AAPL) dominates the market for hearables, truly wireless ear-worn wearable devices that include advanced features like accessing virtual assistants or fitness tracking. Truly wireless earbuds have emerged as a key competitive battleground for tech companies, with Microsoft's Surface Earbuds, Amazon's Echo Buds, and Alphabet subsidiary Google's Pixel Buds 2 all being announced within the past couple of months.

With competition intensifying, it comes as little surprise that rivals are starting to chip away at Apple's hearables market share, even as the Mac maker continues to enjoy a commanding lead.

Expanded internals of AirPods Pro

Apple launched AirPods Pro at the end of October. Image source: Apple.

Apple grabbed 45% of hearables in the third quarter

Counterpoint Research recently released its latest estimates for the hearables market in the third quarter, showing that the global market jumped 22% quarter over quarter to reach 33 million units, translating into $4.1 billion in revenue overall. The U.S. represented 31% of global shipments, topping 10 million units for the first time, according to Counterpoint.

Apple saw its market share slip from 53% in the second quarter to 45% in Q3. The decline is not attributable to the aforementioned products announced by U.S.-based peers, as those devices did not ship during the third quarter. In Google's case, Pixel Buds 2 won't ship until early 2020.

Chart showing wearables units and revenue in Q3

Image source: Counterpoint Research.

Rather, China's Xiaomi took the No. 2 spot. The Chinese hearables market posted 44% sequential growth and the company's Redmi Airdots enjoyed strong demand thanks in part to aggressive pricing of just $20. Samsung fell to No. 3; the South Korean tech conglomerate released its Galaxy Buds in early 2019.

In a statement, Counterpoint Research senior analyst Liz Lee said:

The recognition that true wireless hearables are the most useful and convenient smartphone accessories is spreading fast among consumers. The elimination of inconvenient wires, sophisticated designs with advanced features such as active noise cancellation is proving a significant purchase motivator. True wireless hearables are also in line with future product strategies focused on voice communications from global tech companies and their efforts to create high-added value.

A Fortune 167 company

Wearables were among Apple's strongest segments in the third quarter. CEO Tim Cook continued his frustrating habit of comparing Apple's wearables business to various spots in the Fortune 500. Cook said in August that the wearables business had reached the size of a Fortune 200 company, which is a roundabout way of saying wearables trailing-12-month (TTM) revenue was approximately $15.7 billion.

"Our Wearables business showed explosive growth and generated more annual revenue than two-thirds of the companies in the Fortune 500," Cook said last month. In other words, Apple's wearables business is now the size of a Fortune 167 company. Thanks, Tim.

Based on the 2019 rankings, that puts Apple's wearables TTM revenue at about $18.9 billion.