Don't see why this is a such bad thing for BMW - Porsche has 20+ variants of the 911 and they claim that each and every one of them has an ideal customer. Only difference is that they sell about 200k vehicles a year and BMW does close to 2million.
While I believe we are past the point of no return there is a brand exclusivity issue - people that want that just won't buy a BMW anymore. I know many friends that have abandoned the brand for that reason - maybe BMW does not care but its happening. People now more then ever are buying BMW's as their DDs and saving other brands for special/weekend warriors. I remember when my friend had an M3 back in 2002 (Laguna) it would not see a drop of rain let alone winter. I know ///M is attempting to differentiate as special but its a tough job for them.
With loss of brand exclusivity comes plummeting values of the high end range because they become disposable sheet metal that is good today and old tomorrow. Over time BMW will position itself to become the value brand of luxury using finance specials and great lease options to push volume. Driving a BMW will eventually become like owning a TAG watch "a good starter luxury watch" my jewelry buddy says.
I definitely do not disagree with what BMW is doing but be ready to take a sweet hit when it comes time to sell.