Other developers will happily come along, work within Apple's guidelines, and sell to the giant slice of the pie chart. It's obviously a radically different model of software development, and one that's probably far less appealing to current developers, but that's what happens when industries change. The incumbents never like it.
The same thing's coming to Windows, too, thanks to the Windows Store. The whole industry's headed toward appliance computing. Maybe you can sell software to Linux users.
That makes it sound like sandboxing is a matter of personal taste, and that if I as a developer consider my self "too good to sandbox" someone else will eat my lunch.
I fully agree with your line of reasoning in many other debates about the App Store, and I'm not against appliance computing. Take the 30% cut, for instance. If Smile had discontinued TextExpander's App Store presence because they didn't like the 30-70 split, I would be the first to point out that this leaves money on the table for someone who runs a lower-margin business, and that everything is in order as per the free market.
Sandboxing is different in that many features can't be done; not because of price point or some rms-esque FOSS principle, but because policy is holding the technology back. Developers are not given a choice.
It's not about "a different model" where incumbents refuse to compete and lose their foothold because of stubbornness. It's about limiting what any developer can do; they're not given a choice.
We will have perfect competition in the realm of distraction-free writing environments, but we will have no third-party backup tools. Nobody can happily come along and write one, because nobody is allowed, incumbent or otherwise.
TL;DR: No, I'm not speaking out of fear of competition. Sandboxing doesn't just hurt incumbents. It limits products, not development models.
I don't disagree with you at all; I just think that in the appliance-computing future where your computer is basically a toaster, the vast majority of users (ie, potential software customers) won't care about the "missing" apps at all. It's not a coincidence that most of the apps running up against sandboxing are tools aimed at power users -- third-party email clients, application launchers, BBEdit, backup tools, etc. These are specialized apps for users on the thin end of the bell curve. I don't think Apple cares much if they lose all the people who care about third-party text editors if they're able to start selling computers to millions of other ordinary people who have heretofore been terrified of installing software on their computers.
I'm not happy about it either; I guess I just understand what Apple's trying to do, and why Microsoft seems so eager to follow suit by setting up its own store. The "you have to be a computer guy to use computers" era is almost over.
The same thing's coming to Windows, too, thanks to the Windows Store. The whole industry's headed toward appliance computing. Maybe you can sell software to Linux users.