I just finished testing Sanyo’s latest 3LCD home theater projector, the PLV-Z700 and was impressed with its performance. But what made it really impressive is the lowest MSRP to date (by $4) for a 1920×1080 front projector — just $1,995. The review is posted at http://www.hdtvexpert.com/pages_c/Sanyo_PLV-Z700.html.

It wasn’t that long ago that 1280×720 home theater projectors were exclusively the domain of the CEDIA channel, retailing for $10K to $20K. When 1080p DLP and LCoS projectors made their debut, prices were still sky-high for all but well-heeled buyers.

Times change. Two years ago, 1080p projector prices cratered, led by Mitsubishi’s sub-$5K HC5000. Last year, Sanyo stole everyone’s thunder with the sub-$3K PLV-Z2000. Now, we appear to be dancing the limbo: How low can 1080p projector prices go?

The PLV-Z700 isn’t a compromise design when it comes to features. It offers a low-noise fan, variable iris, mechanical lens shift in two axes, and a 1.5 — 2:1 zoom lens. Two HDMI 1.3 connectors round out the model, in effect making it a lower-cost version of the PLV-Z2000.

Sanyo also just introduced a bargain-basement 720p model, the PLV-60 (now undergoing testing in my facility). My question is, given the usual steep discounts that online volume resellers take on Sanyo products, why even bother with a new 720p design? It’s likely that the PLV-Z700 will be widely available for a street price of less than $1,500, which isn’t a lot more than the $1K price tag for the Z60.

Sanyo’s aggressive pricing will make life more difficult for DLP projector manufacturers, who have been similarly slicing and dicing prices of their single-chip 1080p lightboxes to try and keep up with the 3LD crowd. The fact that we are in an economic recession and that consumer spending is down isn’t helping matters.

Will this lower entry point for 1080p projection help sales of Blu-ray players? Not substantially, as they are still too expensive for mainstream buyers and their sales are linked more to sales of 1080p LCD and plasma HDTVs.

A better question might be: What will the DLP and LCoS camps respond with? 3-chip 1080p DLP projectors are still a high-end home theater product, and JVC’s latest D-ILA offerings are tagged well above $5,000. Can either side repeat Mitsubishi’s 2006 coup, and bring forth a $3,995 3-chip/3-panel design by CES 2009?

Epson’s Home Cinema 6100 ($1,999) and Mitsubishi’s HC5500 ($2,495) 1080p 3LCD projectors are also creating more downward pressure on DLP and LCoS prices. Given how small the home theater projector market is (2%) in relation to sales of all HDTVs, it would seem that we’re surely in for even more price-cutting to drive up projector sales as we approach the end of the 4th quarter.

So - how low can they go?