Copy/pasting from where I posted on TheVerge's Facebook page:
Ultimately there will be convergence and it will technically be AR. With AR, you are overlaying the digital world over the real one. Whether you've overlaid digital over 1% or 99% of the visible world, it's still AR. A device capable of doing that should be able to cover up 100%. Then it's VR. The distinction is only useful short-term. AR will be able to do VR and more.
I had my reservations about both AR and VR, particularly after being underwhelmed by the Google Cardboard experience. Since my initial reticence, however, I've used the HTC Vive and felt completely different. I now firmly believe that these technologies will be part of the future. My mental model of them has gone from "controlling the game's camera with your head" to Star Trek's Holodeck. It was quite profound. When the fidelity of tracking passes a threshold you truly believe you are somewhere else; the abstraction falls away.
Apple's devices will become powerful enough to handle VR and AR — that's just technology over time, but it's not even close to being the entire solve for this. Apple actually has a huge advantage over its competitors. For this tech to catch on with the mainstream it needs a few things that Apple is uniquely positioned to provide.
It needs to be productized. Not buying a headset, plus a PC that meets some spec, using an OS that was never meant for AR/VR where you're jumping between paradigms, plus partnerships outside of gaming. People will want to buy AR/VR. Period. Not cobble an experience together themselves. People will want to try it out in a retail environment rather than just buying over the web. It needs to be miniaturized from bulky headsets. NO ONE does that better than Apple.
One part that's going to be hard is that I think social will end up being one of (if not
the) killer app. It might take Facebook failing with Oculus and the mainstream before they partner. I think AR and VR are at least 5 years away anyway. Everyone pushing now and the public's disillusionment may push it out to 8.