Hi there Eric!
Edited by scolaiw - 2/17/13 at 4:16am
It's great to see there are other car enthusiasts as well as audiophiles on this forum. I'm currently waiting for my brand new X1 (E84) to be shipped from Germany to Australia for which I have opted for the Harman Kardon upgrade. Last time I called the dealer, it's expected to arrive late march this year. The wait is killing me!
I've personally auditioned it at the dealer using my iPhone 5 and the lighting-USB cable with ALACs. At first I was disappointed as it sounded bland and not a significant improvement from the HiFi option (the mid-tier option). I was wrong. Since I was at the dealer, I was too embarrassed to play my music at more than just a quiet volume. During the test drive, the saleswoman let me blast it and I can honestly say it was amazing! The clarity was impressive, and the soundstage is even wider than many home theatre systems/HiFis. It has a smooth, sleepy sound that makes the overall experience very enjoyable. However; I would still say it's not nearly as detailed as high-end headphones like the HD800 or the Orpheus.
The bass was more pronounced though since the subwoofers (yes there are two) are positioned beneath both front seats and you can physically feel the bass through the seat. The bass is slightly punchy but refined and not muffly at all. The mids were warm but laid back. It didn't feel recessed at all due to the well refined bass. Vocals sounded brilliant to the ears with some of the best female vocals I've heard in a while. The treble was bright but not fatiguing. I didn't notice any sibilance even at the high volumes I was listening at but the treble remained clear and balanced. I would say overall the sound signature was flat with a slight bass bump (although admittedly, I'm not sure if it's a placebo due to the literal chair/body thumping bass). I would say it has the sound of a WARM solid state amp, like if you imagine turning up the bloom on a photo but without the loss of clarity.
Normally I prefer not to fiddle with EQ, but given the unique listening environment of a car, I found that altering the eq ever so slightly (in the built in car settings) may help to tailor the sound to their preference. I didn't touch it too much because I didn't want to mess with such a fantastic sound. Overall, I found that it was a true genre master with classical sounding particularly great due to the refined bass and brilliant soundstage. Electronic music was also particularly fantastic.
For the price, the Harman Kardon upgrade was a true bargain... so long as you prefer your music medium to loud.
Having said all that, Harman Kardon tune their systems differently per different cars and since yours will be in a 3 series it may end up sounding different. Speaking of which, I just want to double check, you said E46, isn't that the 4th gen 3 series? We used to own a 1998 328i (which is and E46) with the Harman Kardon upgrade and I don't remember it sounding as good what I just described though. From memory, it had a similar sound signature but less clarity although admittedly, in between we've switched to an E53 followed by and E70 (both X5s with only the HiFi upgrade) so I've long since heard the sound of the Harman Kardon upgrade of the E46. Although are you sure you don't mean the E90 or F30 (the current gen 3 series)?
With regards to BSW, I've never heard of them so I can't speak for or against that company.
Hope this helps anyway.