I’m in Los Angeles for Microsoft’s Professional Developer’s Conference – one that has a strangely subdued build-up. I have been to many PDCs but this one is different. One thing I’ve noticed is that a combination of the difficult economy and a rumoured shortfall in attendance has resulted in some obvious slimming-down: flimsy bag, no breakfast for attendees, no free shuttle to the airport on the last day, no big party at LA Universal Studios.

There’s always a case for less extravagance at conferences; but it conveys a subtle PR message that isn’t a good one for Microsoft.

What matters though is the content. Clearly there are two strands to this. One is the regular turning of the Microsoft wheel – Windows 7 development, new Office, new SharePoint, maybe a new IE and a new Silverlight.

Microsoft has to do this; but there is no escaping: the world is changing, and bloated desktop apps and complex in-house servers and server applications are not the wave of the future.

I am still mulling over something said to me recently by an IT admin in education, when I was researching the progress there of Google Apps and Microsoft Live@Edu. He had overseen a migration of student email to Google Apps, over 20,000 accounts, and I asked him what problems he had encountered. I’ve been in IT for years, he told me, and there are always unexpected issues; but this time there really were none.

So the other theme at PDC is whether Microsoft’s cloud efforts can get off the ground and compete in this new world. The interesting thought is this: even if Windows Azure is a wild success, and if the Live properties start to perform, what chance does Microsoft have of even sustaining its current level of revenue and profit?

In practice, the company will always be under irresistible pressure to use any cloud success to promote the products from which it makes its money: Windows and Office. And that in turn will undermine its cloud efforts, as users realise they are not getting the liberation from hefty client-side dependencies which is inherent to a true cloud story.

Just to remind you: check out the “online” section of recent Microsoft financial reports.

That said, there is an unexpected twist in the run-up to PDC, which is the gathering Google backlash. The must-read is Tim O’Reilly’s War for the Web:

We’re heading into a war for control of the web. And in the end, it’s more than that, it’s a war against the web as an interoperable platform. Instead, we’re facing the prospect of Facebook as the platform, Apple as the platform, Google as the platform, Amazon as the platform, where big companies slug it out until one is king of the hill.

And it’s time for developers to take a stand. If you don’t want a repeat of the PC era, place your bets now on open systems. Don’t wait till it’s too late.

O’Reilly closes his piece with a thought-provoking comment:

P.S. One prediction: Microsoft will emerge as a champion of the open web platform, supporting interoperable web services from many independent players, much as IBM emerged as the leading enterprise backer of Linux.

It sounds unlikely; but where do you go if your mood is “anything but Google”? We could see some surprising new alliances; though I honestly do not see the Windows-Office empire within Microsoft accepting that kind of role under the current leadership.

The PDC is generally where Microsoft sets out its strategy for the coming year or more. It had better be good.