While most people here will probably disagree, I believe that Microsoft's approach, that is, with AR, will be more successful. Virtual Reality has yet to prove that it can be useful in areas other gaming.

Augmented Reality has plenty of use cases - in more areas than the consumer space. For example, the demo that Microsoft showed off yesterday with testing out how furniture looks before you buy it could be huge. Or how about an app that has you stand in front of a mirror and try on clothes - online?

AR is life++; VR is reinventing life. The former will almost inevitably come easier and find more success, at least initially.