Steve Ballmer laughing at the iPhone as "the world's most expensive phone" type of moment https://www.youtube.com/watch?v=eywi0h_Y5_U
How close to prime time is AR?
It's hard to judge that without hands on experience.
Close or not, unlike the mid-90s, Apple can likely afford to burn money for a while on a big gamble. Trying to open up a new product category that plays to Apple's strengths is probably the correct strategy, so long as there isn't a better viable product.
I doubt this will storm the world the same way the iPhone did, so it'll likely be a while before it can be judged as a success or failure.