The 3-inch compact floppy disk

Throughout the early 1980s the limitations of the 5¼-inch format were starting to become clear. Originally designed to be smaller and more practical than the 8-inch format, the 5¼-inch system was itself too large, and as the quality of the recording media grew, the same amount of data could be placed on a smaller surface. Another problem was that the 5¼-inch disks were simply scaled down versions of the 8-inch disks, which had never really been engineered for ease of use. The thin folded-plastic shell allowed the disk to be easily damaged through bending, and allowed dirt to get onto the disk surface through the opening.

A number of solutions were developed, with drives at 2-inch, 2½-inch, 3-inch and 3½-inch (50, 60, 75 and 90 mm) all being offered by various companies. They all shared a number of advantages over the older format, including a small form factor and a rigid case with a slideable write protect catch. The almost-universal use of the 5¼-inch format made it very difficult for any of these new formats to gain any significant market share. Some of these formats included Dysan and Shugart's 3¼-inch floppy disk, the later ubiquitous Sony 3.5" disk and the 3-inch format:

• the 3-inch BRG MCD-1 developed in 1973 by Marcell Jánosi, a Hungarian inventor of Budapest Radiotechnic Company (Budapesti Rádiótechnikai Gyár - BRG).

• the AmDisk-3 Micro-Floppy-disk cartridge system in December 1982, which was originally designed for use with the Apple II Disk II interface card

• the Mitsumi's Quick Disk 3-inch floppies.

The 3-inch floppy drive itself was manufactured by Hitachi, Matsushita and Maxell. Only Teac outside this "network" is known to have produced drives. Similarly, only three manufacturers of media (Maxell, Matsushita and Tatung) are known (sometimes also branded Yamaha, Amsoft, Panasonic, Tandy, Godexco and Dixons), but "no-name" disks with questionable quality have been seen in circulation.
Amstrad included a 3-inch single-sided, double-density (180 KB) drive in their CPC and some models of PCW. The PCW-8512 included a double-sided, quad density (720 KB) as the second drive and later models, such as the PCW-9512 used quad density even for the first drive. The single-sided double density (180 KB) drive was "inherited" by the ZX Spectrum +3 computer after Amstrad bought the rights from Sinclair. The Oric-1 & Atmos systems from Oric International also used the 3-inch floppy drives, originally shipping with the Atmos, but also supported on the older Oric-1.
Since all 3-inch media were double-sided in nature, single-sided drive owners were able to flip the disk over to use the other side. The sides were termed "A" and "B" and were completely independent, but single-sided drive units could only access the upper side at one time.
The disk format itself had no more capacity than the more popular (and cheaper) 5¼-inch floppies. Each side of a double-density disk held 180 KB for a total of 360 KB per disk, and 720 KB for quad-density disks. Unlike 5¼-inch or 3½-inch disks, the 3-inch disks were designed to be reversible and sported two independent write-protect switches. It was also more reliable thanks to its hard casing.
3-inch drives were also used on a number of exotic and obscure CP/M systems such as the Tatung Einstein and occasionally on MSX systems in some regions. Other computers to have used this format are the more unknown Gavilan Mobile Computer and Matsushita's National Mybrain 3000. The Yamaha MDR-1 also used 3-inch drives.
The main problems with this format were the high price, due to the quite elaborate and complex case mechanisms. However, the tip on the weight was when Sony in 1984 convinced Apple Computer to use the 3½-inch drives in the Macintosh 128K model, effectively making the 3½-inch drive a de-facto standard.