I think the key for success will be what the device is able to replace hobby-wise. My favorite part of VR is that it allows me to do this with space restrictions, with some cost offsetting.

For example, there's a program on Steam called SynthVR. It lets you create a synthesizer rack with as much space as you can imagine. You don't need a huge room to store all your equipment, you don't need to spend money on each piece of equipment, you just open VR, load a scene or build it from scratch and you've got synths.

From a hobby perspective, I could have spent $1,000 on the Valve Index, or I could have spent it on getting ~5 components for a real synth rack, which I then have to have space in my home for.

That $1,000 for VR however also lets me use Vermillion, a VR oil painting program. I enjoy painting but I'm not the greatest, most of the time it's tiresome to set up the paint space and put it all away, worry about my huge dog knocking everything over... Or I just have my VR space and paint for a little while.

I also use Paradiddle, a VR drumming program. It can connect to live equipment, or just use it with VR. I don't have e-drums so I use this for when I'm feeling like using a drum set and not my pads.

IMO, these are what Apple should be aiming for with this device. AR or VR, the best aspects of it always come down to utilizing empty space to give the user a replacement. Even productivity in VR is enjoyable for me because I am huge on VR overlays (like OVR Toolkit or XS Overlay) where you can be in VR and pop open a floating window of a video, or text guide. Rows and columns of documents floating in space, or pinned to your head/hand. I use my phone in VR this way, by connecting my phone to my computer with SCRCPY and then opening it as a panel in VR.

I haven't kept up with this device too much, and I can't even say that an AR variant of what I described is worth $3,500, but I could see some promising applications for the device. Not to the extent that people would be walking around with them outside though. At least, not until it's a few thousands dollars cheaper, and quite a bit smaller.