Hololens is a great step towards great augmented reality but cannot compete with the VR of the Oculus Rift currently because the Rift has an enormous FOV that the Hololens cannot match. Hololens is like looking at a little screen at the center of your vision, Oculus's VR display is like you are immersed in a gigantic world.

Hololens:

You can see the real world
Self-contained unit (advantage and a disadvantage)
Lower FOV (guessing 30-45 degrees)
Nice overlay on the real world that has depth cues
Primitive hand tracking
Positional Tracking

Oculus Rift (DK2):

Positional tracking, but uses an external reference point
Wired to a PC
Cannot see the real world
High degree FOV (100)
Much lower latency
Currently no hand tracking

Oculus/Samsung's Gear VR

No external tracking, but currently no positional tracking
Not wired
High FOV (~96)
Cannot see the real world, unless using a form camera passthrough
Pretty low latency
No hand tracking etc.

Differences in Design:

Hololens has much lower FOV than VR headsets and uses tinted glasses that allow you to see reality in your periphery. This allows you much higher tolerances on latency (Kinect hardware usually has ~70ms latency on the input alone) BUT it also means that the environment isn't as immersive as VR. Sure, you can say that you can "block" the outside light using some magic technology, which it can't. But even if you did, the low FOV means that it is really not any better than using a passthrough camera on a VR headset to do AR, which you can already do. So the Hololens' VR is not up to Rift's standard at all, just as Gear VR's AR isn't up to Hololens' standard. Not to mention that most people have only had sneak peeks, there are many ways that the Microsoft VR could break like jitters due to latency.

Additionally, while having a self-contained unit is nice and all, it is going to lower the quality of the VR experience when you don't have a souped-up computer with the latest graphics card powering it.

It's kinda like comparing a cellphone to a great TV attached to a media center. In essence, the cellphone is both, but the quality of experience on the TV with a powerful machine just gives much more freedom for the artist and anyone with a home theater will tell you that it's ridiculous watching movies/playing games on a cellphone in comparison. The smartphone is a great device, but it cannot replace the high end gaming/media market because its primary function is easier access to information and connectivity in a convenient form factor, not total immersion.

In Summary:

It's definitely an interesting technology, but the Hololens cannot replace the need for Oculus VR, at least not currently. I do think that the market for AR is much bigger than VR, but there are definitely significant issues with the device as is when thinking about it as a pure VR replacement.

To completely take over the VR market, it will need the ability to connect to a PC wirelessly, have a much much higher FOV (which requires superior optics, much more complicated than Oculus's), lower the total latency down to 20 ms, and have the ability to block most of reality. None of these issues are solved and definitely might not be for the foreseeable future.