"thriving" needs to be defined. My perspective is that the 3rd party app market, including the one over the internet wasn't thriving at all. In store boxes with software did ok, and decentralized distribution over the internet did ok as well. The places it was really thriving is the advanced user market, of which we all fit into, or the enterprise market buying and mass deploying software. The home consumer market wasn't a big area for 3rd party apps to thrive.

General consumers have been burned by malware on Windows, and told it is because they downloaded something. They also didn't generally know where to look for software, nor know how to sort through all the possibilities to find what they wanted. At $50 a pop, it was also a high barrier to even try something and toss it aside if it doesn't work.

Most of the non savvy computer users I know simply stuck to what the OS came with, and perhaps a few packages like Microsoft Office or Quicken. When my mom got an iPhone, she started grabbing apps on her own, just by browsing the integrated store and looking at the top of the charts. This has expanded more to her iPad as well. While she isn't forking over $50 per app, she is part of a growing market segment willing to pay $1 or $2 per app. Economies of scale come into play here to turn this into a thriving market even with the low price mark.

On the games side, the industry is also seeing the massive growth potential for these centralized stores/portals. Steam has helped greatly, as has Facebook and the mobile app markets.

At the end of the day Apple is indeed going to put consumers ahead of developers on their priority list. But I think they have a pretty solid understanding of the importance of developers and the needs to balance it a bit. Sure, they are going to do things that are somewhat hostile on the development side to improve the consumer experience. But honestly, I think thats they way it should be. Place the little bit of pain and hoop hopping where a few developers have to do it, instead of spreading a bit of pain and hoop hopping across the entire customer base.