IBM, Dell (News - Alert) and HP have their hands full competing with Amazon.

Anyone who tracks Amazon’s stock already knows the company is one of the few that gets away with not making much if any profit – yet its share price continues to grow. The argument goes, according to many, that the company can reduce investment at any point and profits will swell. In reality, the company hasn’t done this on a consistent basis for many years. Instead, it continues to drive prices in the cloud computing and other markets downward.

It is so tough to compete with the company that HP recently did something unthinkable. It pulled out of the public cloud market. This is a huge deal because contrary to what hardware vendors want to have happen – there are many businesses using the public cloud to run their organizations.

Moreover, HP seems to be sending a mixed message. On the one hand the company says it can’t compete against public cloud vendors, but on the other, HP says it isn’t leaving the public cloud. What this should tell us is HP will eventually leave the market after it has racked up as-yet-to-be-determined losses. And if companies are moving from servers to the cloud and HP doesn’t provide an offering in this space, it will continue to sell less servers.

Yet just as HP tells us what many did consider obvious – it can’t compete with Amazon, the ecommerce leader has just launched a new service on its cloud which in some ways rivals what IBM (News - Alert) touts as a differentiator with its Watson product. Amazon Machine Learning can do many things such as detecting problematic transactions, preventing customer churn, and improving customer support. The related APIs and wizards guide developers through the process of creating and tuning machine learning models that the company says can easily be deployed and scale to support billions of predictions.

The goal of the solution is to make machine learning broadly accessible to all software developers by abstracting away this complexity and automating these steps which require expertise in statistics, data analysis, and machine learning. Moreover, developers can quickly create as many models as they need, and generate predictions from them with high throughput without worrying about provisioning hardware, distributing and scaling the computational load, managing dependencies, or monitoring and troubleshooting the infrastructure.

“Amazon has a long legacy in machine learning. It powers the product recommendations customers receive on Amazon.com (News - Alert), it is what makes Amazon Echo able to respond to your voice, and it is what allows us to unload an entire truck full of products and make them available for purchase in as little as 30 minutes,” says Jeff Bilger, senior manager at Amazon Machine Learning. “Early on, we recognized that the potential of machine learning could only be realized if we made it accessible to every developer across Amazon. Amazon Machine Learning is the result of everything we’ve learned in the process of enabling thousands of Amazon developers to quickly build models, experiment, and then scale to power planet-scale predictive applications.”

The challenge for server companies is greater than ever as the public cloud – which in many cases people believe is the same thing as AWS – gets better. Innovations such as these are certainly not only happening at Amazon, but what differentiates the company from others is it is willing to reduce prices to a point where there is no profit in order to get customers in the door. This is why Microsoft and Google (News - Alert) often offer $100,000 credits to get promising startups on their cloud before it is too difficult for them to switch.

Amazon, continues to amaze with its bewildering array of products from tablets to cloud services. Obviously the company isn’t infallible because its tablets and phones are having competitive challenges. In cloud, however, the company’s early lead and innovation means the competition in public and private cloud as well as server companies are going to have to find ways to differentiate. And with Amazon adding new innovations to its cloud on a regular basis, another trend I predict is it will be ever-more difficult to point to advantages your cloud provides that Amazon’s doesn’t.