The reality is that it was always unlikely that Microsoft (or Meta, or Google, or Apple…) would be able to create disruption in AR, VR, etc. on the magnitude of the initial iPhone release. Better to keep their powder dry to acquire the startups that potentially can.
It seems obvious to me AI will be the next major disruption. Radically decreasing the need for human labor has an obvious productive advantage while there is no evidence people would prefer to leave reality.
When people have nothing to do they might prefer to leave reality....