That would be a very bad situation for independent software developers. If there were only closed gardens, my guess is that small players would only invest into very small projects - there will be more news readers, FaceBook poke sending apps, farting apps, notes taking apps, kamasutra advice apps, angry birds clones, farmville clones, etc. The realm of more serious applications like 3D Studio, Firefox, Photoshop, Office, or IDEs would be in the hands of the few large players, most likely the owners of the respective gardens.
Fortunately we are not in that situation yet. Microsoft has been very good at eliminating competition that ruled a market segment in the past, but I doubt they will succeed this time. Just as they were unable to take search from Google by copying it, they may not be able to take tablets from Apple by copying their approach.
They have revealed 2 strong weapons - Surface hardware and the WinRT API (HTML+Javasript, XAML and Direct X for GUI
, access rights management, partial compatibility with Win32). The closed Windows Store is a big minus though.