The goal is always to make money, but if Microsoft manages to force Sony out of the business and they get a monopolistic stranglehold on the console market then they will make a LOT more money in the long run. If they "play it safe" they would make money in the short term, but they would have no chance of becoming a monopoly and they wouldn't make as much money in the long run.
Playing it safe and releasing a modest console which makes a modest profit is chump change compared to what Microsoft is really after.
most developers are going to be hesitant to support Microsoft's platform.
The worst case scenario is they just wouldn't take full advantage of the extra power of the Microsoft platform. They would still support it regardless, but they just might not go out of their way to utilize all the bells and whistles.
But something tells me Microsoft isn't going to ease up on the money hats. No developer is going to resist them. So Microsoft's platform will continue to see exclusives, times exclusives, exclusive dlc, and timed exclusive DLC, and so on. Microsoft is a sugardaddy and developers love to support them because Microsoft pays generously for that support.
Combine that with the fact Microsoft's platform will be the most similar to PCs and easiest to port from PCs and I don't think developer support will be any issue whatsoever. Sony and Nintendo may have systems closer to each other, but the PC platform will be closer to Microsoft's console and that means the odds are even.