I think you may be overreacting a bit here, although we won't know until a few years down the track
Apple aren't about to "move desktops/laptops into the App Store's walled garden", but rather they're about to add an optional place to purchase apps. It's an addition that I think may have some benefit for some users and smaller indie developers. I can see it becoming the way most people purchase most of their apps in time, but I can never see it becoming the only way to do so on the mac.
They also haven't dropped support for either Flash or Java. The new MBAs aren't shipping with Flash installed; so what? OSX is the only OS I'm aware of that does ship with Flash. Java? Well, Java's not going anywhere either.
Right, I think Steve is smart enough to not follow so many others down that path in history. A completely closed system would cut developers off at the knees. Which would put Apple on the hook to develop every piece of software for their ecosystem. There is no way the could keep up with the idea factory that is the masses. I think rather Apple sees an opportunity to provide a sales channel where they get a cut of other people work by acting as the distributor and in turn do things like guarantee that the app if free of malicious actions and compatible with OSX systems.
As for Java, I knew this one was coming, Jobs and Ellison are good friends and Apple and Oracle are the only two companies that either are not at war with, they really don't compete in each other spaces. So I think Jobs is comfortable with Oracle providing the JVM for their platform.
I am sure that Steve has resigned any worry in his head that Java is going to achieve desktop dominance so it is not a Trojan horse to his platform where it will be used to provide OSX apps in preference over the native OSX development technologies.
Giving it back to Oracle means that the developers get the latest JVM at the same time as everyone else not waiting up to a year as the cycle comes around itself. I think it is a good move on both companies parts. I just wonder why Steve always has to be so vague. I think his showmanship has become so ingrained that he just can't come right out and say it everything has to be a big announcement. I guess I cant fault him, it's his trademark and has served him well.
I stated this in another thread, but I will restate here because it seems appropriate.
The App Store will most definitely become the most popular way to find and install applications. Therefore if your app is not in the app store it may as well not exist. The regular user is going to search for the best application within that garden to fulfill their needs which puts all developers at the mercy of Apple to get their app in the store.
I wonder that if this model gains popularity on the desktop, how long it will be before users click that app store icon to find an application they need vs. click the browser icon to find a service on the web that may fit that need.
With strong shift towards web based apps over the past few years it's interesting that a move like this may re-invigorate the desktop app!
I think that is true for most indy apps, but stuff from Adobe or Microsoft will be fine. I also expect verticals to continue to do fine (dedicated sales staff and industry rep). If your an small developer then you probably should be in the app store.
People do want native apps (for a bit of humor http://daringfireball.net/linked/2010/10/21/beltzner )because connectivity is not 100% and the fit, finish, and speed of native apps are better. I don't think your wrong, I guess twitter clients kind of prove the point.
Apple aren't about to "move desktops/laptops into the App Store's walled garden", but rather they're about to add an optional place to purchase apps. It's an addition that I think may have some benefit for some users and smaller indie developers. I can see it becoming the way most people purchase most of their apps in time, but I can never see it becoming the only way to do so on the mac.
They also haven't dropped support for either Flash or Java. The new MBAs aren't shipping with Flash installed; so what? OSX is the only OS I'm aware of that does ship with Flash. Java? Well, Java's not going anywhere either.