Today Panasonic has ended months of speculation by formally announcing its plan to bring the PT-AE4000U to the US market. The news that is even more buzz-worthy is that it will be offered at an official street price of just $1,999.

The AE4000 announcement is dramatic. Though its spec sheet does not look revolutionary compared to last year's AE3000, the AE4000 is in fact a superior projector in almost every way. Certainly it surpasses the AE3000 in image quality. And it is even more fully-featured than its predecessor. But what is most stunning is the price. Last October, a mere twelve months ago, the AE3000 was released with street prices close to $3,000. This month the AE4000 comes to market at $1,999. This aggressive move will force other manufacturers competing in the home theater projector market to reassess their pricing levels.

The AE3000 was already the most fully-featured home theater projector on the market. The AE4000 trumps it in several important ways:

• Red-Rich Lamp. Panasonic has engineered a proprietary new high pressure lamp that puts out 50% more red light than its predecessors. High pressure lamps have always been weak in red spectrum light, and this new lamp design takes a big step toward eliminating that weakness. And the difference is obvious. When putting the AE3000 and AE4000 side by side, red elements in the picture are noticeably brighter. The hue of red is no different, but red subject matter as a component of the whole picture is more vibrant. A red stop sign on the AE3000 looks red, but it is somewhat darker relative to the rest of the image than it is on the AE4000. The increased red content of the lamp also contributes significantly to improved skin tones.

• Improved contrast. The AE3000 was rated at 60,000:1, and the AE4000 is 100,000:1. Can you see the difference, you may wonder? Absolutely. When viewed in a dark room side by side, the AE4000 is obviously higher in contrast and deeper in black level than its predecessor. And with higher contrast comes the other typical benefits driven by contrast -- deeper color saturation, an improved sense of image depth, and the impression of increased image sharpness.

The improvement in contrast was not achieved by reducing the aperture on the auto iris. Rather, Panasonic has redesigned what they call the Pure Contrast Plate, an optical component located right after the LCD panels to improve the contrast level. This component effectively allows the polarization filters to block the light leakage caused from the panels, for deeper blacks.

As with the AE3000, the AE4000 uses inorganic LCD panels which also contribute to the higher contrast in these models. In inorganic panels, the liquid crystals are vertically aligned, making it easier for polarizers to filter out almost all light for deeper blacks.

• Improved Cinema mode brightness. The maximum lumen rating has not changed; both the AE3000 and AE4000 are rated at 1600 lumens. However, the red enhanced lamp contributes to a brighter overall image in Cinema mode. Our AE3000 measured 385 lumens in Cinema 1 mode. The AE4000's Cinema 1 puts out 548 lumens, or 42% boost. The other programmed operating modes are brighter as well, but do not show as dramatic an increase. For example, normal mode measured 792 on the AE3000, and we are seeing 950 lumens on the AE4000 (+20%). On the AE4000, the Color 1 and Color 2 modes are both measuring in the 550 lumen range, compared to about 400 on the AE3000.

As a side note, the AE4000's lamp eco-mode has more of an effect on light output. On the AE3000, dropping the lamp into eco-mode reduced light output by 18%. On the AE4000, it reduces it by 32%. On both models, you lose up to 41% of potential light output if you set the 2.0x zoom lens to the maximum long throw position (smallest image from any given distance).

• Improved color accuracy. The Cinema 1 mode delivers virtually perfect color balance, measuring almost exactly 6500K across the entire gray scale with a beautifully flat line on the color temperature graph. For those who want to pull it out of the box and run without worrying about calibration, this is as close as it gets to ideal. Discs that are properly transferred will be seen as the director intended the films to be seen, including whatever tints and color biases that may have been engineered into the original.

• Improved Detail Clarity Processor. The AE3000 has a Detail Clarity Processor that you can set to either On or Off. When activated, the picture appears sharper and fine details pop out. Sometimes this effect is desired and sometimes it isn't, depending on the nature of the material being viewed. On the AE4000, the "Detail Clarity Processor 3" is an improved system that lets you choose the amount of resolution enhancement you want in the picture. You activate it by selecting a level from 1 to 7. The factory default is position 2. We found that boosting it to 3 or 4 lent the picture additional apparent resolution, without adding unwanted artifacts. Raising it to 7 goes way over the top for typical film material, and makes skin look like it has the texture of sandpaper. But overall, this system is more precise and user friendly than the earlier version.

• Improved Frame Interpolation. Panasonic uses the marketing term Frame Creation for its frame interpolation system. The AE3000 had three options for Frame Creation: Off, Mode 1 and Mode 2. Mode 1 buffered two frames and created one or more interim frames from those. Mode 2 buffered three frames and created one or more interim frames. Mode 2 was more comprehensive, but created more video delay.

The AE4000 incorporates the second generation of this system, and is thus called Frame Creation 2. It has the same Mode 1 and 2 as the original, but it has a new Mode 3. This also buffers three frames for analysis, but it performs much more processing to achieve a better result. Video delay in Mode 1 is modest, more noticeable in Mode 2, and more visible yet in Mode 3. Modes 2 and 3 put the picture visibly out of synch with the audio. Thus an audio delay is required to keep the picture and sound in synch when using the Frame Creation system.

The Frame Creation system reduces motion judder in increments-it is somewhat reduced in Mode 1, more so in Mode 2, and virtually non-existent in Mode 3. It accomplishes this with only occasional subtle artifacts. Depending on the material being viewed, Frame Creation can impart a hyper-reality to the image, making a movie look as it if were made with an HD videocam rather than a film camera. Some people like this effect, and others find it quite objectionable. Either way, this effect on the AE3000 and AE4000 is subtle when compared to competing models from last year on which the effect is more pronounced.

One demo that is quite interesting, if you ever have the chance to stage it, is to run a projector without frame interpolation side by side with the AE4000. When the pictures are adjacent to one another and the AE4000's clean, stable image is used as a reference, it is startling to see just how much judder and instability there is in the picture that is not being processed with frame interpolation.

The bottom line is that some users will want to use Frame Creation on everything they watch. Some will prefer to use it selectively, on material like animated films and sports broadcasts. Some won't use it at all. But it is nice to have the option.

• Advanced Gamma Adjustments. On the AE3000, gamma controls are straightforward and basic, consisting of three separate up or down controls for the low, mid, and high range of the curve. This set of controls is available on the AE4000 also, and is labeled as "Simple." But in addition, the AE4000 offers an "Advanced" system that provides a great deal more control for precise fine-tuning. R, G, B, and Y components can be adjusted independently at nine different points on the curve rather than three. Most users won't be bothering themselves with this, but those into precision adjustment of their video display will appreciate it.

• Two programmable 12-volt triggers. On most projectors, the 12-volt trigger is an outbound signal that will activate an electric screen, or withdraw powered curtains, etc., when the projector is powered on. On the AE4000, there are two triggers, and they can be programmed to act either as inbound or outbound triggers. With this flexibility, you can wire together a whole array of components in the theater to activate simultaneously.

• Increased resistance to dust. The metal housings containing the LCD panels have been partially sealed in a way that they were not on previous models. This modification will further reduce the potential for dust particles to reach them.

• Intelligent Lens Memory. Lens memory was introduced by Panasonic on the AE3000. This feature enables you to set up the projector with a 2.40 widescreen, and zoom the lens to full frame 2.40 format when viewing a movie in 2.40 aspect ratio or higher. Then when native 16:9 material is being displayed, a push of the button moves the zoom lens to where the 16:9 image is centered full frame in the middle of the 2.40 screen. The objective is to let you enjoy super-widescreen format without the cost of an anamorphic lens. The AE4000 retains this feature and takes it one step further-now you don't have to press the button to change lens positions. The projector will automatically detect the format of the image being displayed, and the lens will reconfigure itself to accommodate it. This feature is optional. If you prefer to be proactive and select the lens position yourself, you can deactivate the auto-detect feature.

In addition to the new or enhanced features/capabilities just reviewed, the AE4000 has all of the other features found on the AE3000, including:

• User-friendly Menu Interface. We didn't mention this benefit on previous models but should have. The AE4000 and predecessors offer a menu that remembers the adjustment you made previously, and will enable you to bypass the normal access route through the menu in order to get back to that same adjustment.

For example, the Frame Creation setting is deep in the Advanced section of the menu, and the first time you go there requires anywhere from 9 to 16 clicks depending on the route you take. But if you set Frame Creation to Mode 1, and then decide you want to see what Mode 2 looks like, it only takes two clicks to get back to the Frame Creation control to reset it. On most projectors, you have to go through the entire 9 to 16 click sequence all over again. This is true of all adjustments including color, gamma, and so on. This makes all menu controls much easier to access and manipulate.

Another feature of the user-friendly menu is that once you have selected a control to adjust, the menu disappears and just the control bar for the one function you are adjusting drops to the bottom of the screen. That way you can see precisely the effect that adjustment is having on the picture. On many competing models, the entire menu remains in place, and you are left to wonder what is happening to the picture. The more we work with projectors, the more we grow to appreciate these user-friendly features that appear on the AE4000.

• Gaming Mode. Video delay is not a good thing for gaming, and audio delay does not fix the problem. So the AE3000 and AE4000 both have a feature which is not called Gaming Mode, but could be. It is called Frame Response, and it lets you adjust the speed of frame delivery from the buffer. Your options are "Normal" and "Fast." "Normal" will provide normal video processing and results in a frame delay of about 3 frames (assuming Frame Creation is off). "Fast" will eliminate some of the standard video processing overhead and cuts frame delay to about 1.5 frames. There is no way for a video picture to appear instantaneously with zero delay on any digital video display, so the Fast frame delivery feature on the AE3000/4000 is about as good as it gets.

• Smooth-screen filter. Panasonic home theater projectors are famous for their Smooth Screen technology--essentially a filter that removes visible pixelation. The AE4000 has this same feature. We used to think that Smooth Screen reduced the sharpness of the image. It does not. Keep in mind when setting up a competing projector with the AE4000 in a side by side test, the "0" settings on the sharpness menus are not identical. Panasonic's models always have the sharpness setting default to zero with no artificial edge enhancement. Competing models usually default to zero also, but their so-called "0" setting often has some built in edge enhancement. On such models, the sharpness control needs to be turned off, or down to -5 or -10 depending on the model in question, to equal what Panasonic models are already defaulted to. Conversely, you can turn the sharpness setting on the AE4000 up to +5 or so to more closely approximate what 0 is on competing units. Once you balance out the edge enhancement, there is no significant difference in image sharpness between the AE4000 and other models in its price range. And if you boost the Detail Clarity Processor to +3 or +4, you get an extremely sharp picture with an abundance of detail definition.

• On-board Wave Form Monitor. The wave form monitor assists in the calibration of the projector, and for those into serious tweaking it is a great tool to have available. Professional installers in particular will find this tool useful. The AE4000 and its predecessors are the only home theater models anywhere near this price range that have this feature.

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• Split Screen Calibration. Introduced initially on the AE2000, this as been carried forward in both the 3000 and 4000. It enables you to select a portion of the screen image, then duplicate it side by side. Having done this, you can apply image control adjustments, and they will appear on the right image while holding the left image static. This lets you see the changes you are making to the picture in "before and after" presentation. Thus you can see precisely the effects of the changes you are making. You can finish by either saving or discarding the changes you've been experimenting with. For many users, this is a great educational tool that helps you understand the nature and range of the various adjustment controls available to you.

There are several things to keep in mind if you are planning to install an AE4000. The most important is that the combination of the zoom lens and eco-mode lamp can curtail lumen output significantly. The Cinema 1 mode is about 550 lumens with the lamp on full power and the zoom set to its shortest throw distance (largest picture from any given distance). Given the contrast of this projector, that is plenty of light to fill a 150" diagonal screen in a dark room, and still have a sparkling high contrast image.

However, if you move the projector back to its maximum throw distance, you lose 40% of the light, so Cinema 1 drops to about 330 lumens. You would probably want to either move the projector forward, or reduce the screen size, or switch to a brighter operating mode like Normal. These trade-offs should be taken into consideration during the planning phase. Similarly, putting the lamp into eco-mode sacrifices 32% of your light. That may or may not be something you can accept based on the screen size, throw distance, and desired operating mode.

Air Filter. Another thing to keep in mind is that the AE4000 has an air filter that should be cleaned every 100 hours of use. That sound like an onerous task, but it isn't. Cleaning does not entail replacing or washing the filter. It just needs to be vacuumed, so we suggest you get a hand-held vacuum cleaner for about $25 and keep it handy in your theater room. The air filter cartridge easily unsnaps from the side of the unit with a poke of the finger. Pulling the filter cartridge, giving it a thorough vacuum, and clicking the cartridge back into place takes about 30 seconds. The manual requests that you do this after every 100 hours of use, or once every 50 movies or so. Keeping the filter free of dust build up will give you maximum lamp life, and reduce the chances of getting any dust contamination inside the unit.

Focusing. If we are looking for tiny things to complain about, we could mention that it is a bit harder to focus the AE4000 than it is competing models. For one, the Smooth Screen filter pretty much erases any distinct pixel structure. On most projectors, getting the pixels as sharp as possible is the ultimate objective, but that is not possible on this unit since discrete pixels are not there. So you have to look at the graphics provided, which, for the purpose of fine focusing, is not quite as ideal.

Beyond that, the powered focus does not have a fine step function, so it is easy to overshoot the target. We found ourselves running back and forth through the sweet spot several times until we hit it just right. It takes a bit of fussing with, but once it is focused it stays there until you move the projector.

Warranty. The warranty is more limited that many in the home theater market. The purchase price includes parts and labor service for one year or 2000 hours of use, whichever comes first. By filing a claim form similar to a mail-in rebate, Panasonic will extend it to two years or 2000 hours, whichever comes first. The 2000 hour limit is not typical in the industry, and is something to be aware of if you plan on using your projector for many hours a day. If you run your projector for 5.5 hours per day, 7 days per week, you will hit the 2000 hour limit in 12 months. In this case the extension secured by filing the claim form does you no good. On the other hand, if you don't spend more than 2.7 hours a day, seven days a week, watching your projector, you get the full two years of warranty.

The Panasonic PT-AE4000 sets a new benchmark for price/performance in the home theater industry. In both picture quality and features, it easily surpasses the AE3000. And at just $1,999 it will have an earthshaking effect on prices throughout the industry. No other projector is as fully-loaded with user friendly features as this one; other than the AE3000, no other competing model even comes close in features and functionality. But what it always comes down to is picture quality. And in this regard, the AE4000 surpasses not only the AE3000, but all other 1080p models that we have yet seen under $3,000. It is not the brightness unit on the market by any stretch. Several other inexpensive 1080p models have brighter Cinema modes. But if you are looking for extremely high image quality and are willing to give up a little lumen output to get it, the AE4000 produces a refined, elegant picture that is extremely difficult to beat.

Since the AE4000's picture quality not only surpasses the competitors in its price range, but rivals and in some cases exceeds that of "high-end" models selling for five times the price or more, it warrants a solid 5 stars for performance. Since it has more features than any other home theater projector ever built, 5 stars is not even enough to illustrate its distinction in this category. Similarly, its ease of use is unrivaled-perfect color calibration out of the box in Cinema 1 mode, smart menus that are easy to navigate, lens memory to accommodate 2.40 super widescreen without an anamophic lens-no other projector has all of these things, and most have none of them.

All of this adds up to a remarkable value proposition: at a street of $1,999, we've simply never seen this much performance at this price. Panasonic has been extremely tight-lipped about this product launch. Until now many thought the company was dropping out of the home theater projector market. Today's announcement makes it clear that they are here to stay. The Panasonic PT-AE4000U will be one of the hottest selling home theater projectors of the fall season, and we enthusiastically give it our highest recommendation.

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