After the launch of the first CD player, Tsurushima and his colleagues at the Engineering Development Department of the Audio Business Group decided to develop a more compact CD player that required fewer parts and less power. They worked vigorously to improve the CDP-101, enlisting the help of other divisions, while striving to develop a one-chip LSI circuit and reduce the size and thickness of the optical pickup device. The Audio Division, under the leadership of Idei, was pushing ahead with a project to reduce the cost of the CD player. They called this project the  CD CD Project, or the Compact Disc Cost Down Project. To meet a price target ranging between 50,000-60,000 yen, it was necessary to significantly reduce the costs of the optical pickup device and semiconductors used. Idei and his team approached the relevant people with requests to build these parts at a specific reduced price. At first, they were told it was impossible. However, members of the division overseeing the development of these components did everything they could and eventually found a way to manufacture cheaper and more compact parts. In autumn 1983, Sony had the technology to build a CD player deck that was one-tenth the size of its first player. The tremendous effort that went into the development of these key devices yielded a greatly enhanced CD system.
By the beginning of 1983, several other companies began selling CD players. Roughly one thousand CD titles were available, and the CDP-101 was selling well by year's end. This initial frenzy gradually subsided, however, and the CD market was lackluster for nearly a year.
Customers who had purchased the original CD systems were mainly audio enthusiasts, such as lovers of classical and jazz music. At the time, many people were still satisfied with LP records. The market appeared saturated, and the poor state of the audio equipment industry seemed unlikely to improve.
Executives at Sony realized that something had to be done to revive the market. A product that would popularize the CD needed to be launched quickly. Amidst this, Sony introduced a revolutionary CD player, the D-50. This was the first portable CD player from Sony, and it was the size of a CD case. The General Audio Division, which handled portable tape recorders and radios, was responsible for commercializing the D-50.
 We're going to commercialize a CD player of this size, said Ohsone, head of the General Audio Division while showing his staff a piece of wood which was 13.4 cm across and about 4 cm thick. This was about the same size as four CD cases stacked one on top of another. He added, I don't care how you do it, or whether you decide to put cicadas or grasshoppers in it, but just make this produce sound. Everyone laughed. Although Ohsone was always humorous and optimistic like this, meeting his targets always seemed difficult. His staff was in disbelief. Ohsone had the custom of using wooden models to illustrate the target sizes of future products. Like this, he would say pointing to the wood, don't focus on the difficulty of making the technology even smaller. Just make it a size that pleases users. Under Ohsone's direction, members of the General Audio Division toiled to create a smaller and thinner CD player.
Morita, who was chairman at the time, wanted to see the CD gain widespread consumer acceptance. Regarding the target price, he said, Let's offer it for less than 50,000 yen. We might go into the red at first, but later we'll turn a profit. The price of the new product was set at 50,000 yen (about one-third the 168,000 yen price of the CDP-101). The 50,000 yen target price was actually half the cost price of the new unit.
In November 1984, the second anniversary of the CD, the D-50 was launched and it caused a great sensation in the audio world. Retailing at only 49,800 yen, the D-50 was the size of a CD case and it offered similar functions to the CDP-101, but came without a remote control and repeat functions. Even those within Sony could not believe that Sony had launched an advanced CD player that sold for less than 50,000 yen.
The D-50 acted as a catalyst, turning around the sluggish audio industry from the first day of its launch. One member of the development team who was unable to contain his surprise, remarked, We never imagined that the D-50 would sell this well. After a year and a half on the market, the D-50 became profitable. As the product gained popularity, Sony began to create a portable CD market. The result was that all other audio equipment manufacturers slashed the price of their CD players. The number of CD titles suddenly grew, and the CD industry as a whole saw a full-scale recovery. Sony's line of portable CD players, which enjoyed widespread popularity following the success of the D-50, was nicknamed Discman since these portable players allowed the user to enjoy music while on the move similar to the Walkman.
The gains in Sony's audio business were also partly due to the leadership of Nobuo Kanoi, who had become head of the Audio Business Group. Kanoi's production and sales policy was to develop products that instantly attracted customers due to brand recognition. He repeatedly told his staff, Go visit electronics shops and see what customers are buying. He encouraged the development of high quality products at affordable prices through efficiency in design and production. Kanoi worked actively to improve the international culture of the Audio Business Group and often held seminars that ran late into the night. His beliefs, referred to as the Kanoi Theory, were widely adopted by Sony employees.
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