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Apple was right on so many levels early on to lock down the iPhone. If it weren't for the ecosystem being ruled under an iron fist, we probably would have gotten a ton of slow and shitty ported Brew software and other bullshit with scrollbars and drop down menus and other non touch optimal bullshit. Not allowing flash on the platform to me is an extension of all the good ways they locked down that ecosystem to keep the AIDS of the internet and mobile software world from infesting it.
I would say the walled garden hurts them more than helps at this time, but you can't make a company change that makes the kind of money they do.