With hardware sales down 25 percent and cloud bookings up more than a third, Oracle faces a new set of priorities and more competition than ever, founder and CEO Larry Ellison acknowledged during his firm’s second quarter earnings call. The database giant has committed to following rivals IBM and SAP in transitioning beyond legacy IT towards the new capabilities and business models enterprise customers have come to expect.

Laying out his battleplan, Ellison told analysts that Oracle is willing to go as far as sacrificing its profit margins to catch up with the fast moving cloud market. The company hopes to loosen the incumbent vendors’ grip on the industry by going on the offensive across the entire cloud spectrum, with a competitively priced infrastructure-as-a-service powering a set of high value software offerings that can be consumed on demand.

Not disclosing a time frame, Ellison declared that “we are going to be cost competitive and price competitive at the infrastructure level while being highly differentiated at both the platform level and the application level.” The executive didn’t specify how Oracle intends to match the dizzying array of capabilities available with competing offerings already clear, but he made it clear that Oracle is not as attached to its legacy boxes and steep maintenance fees as it used to be.

“Down at the infrastructure level, we intend to be price competitive with Amazon and Microsoft Azure and Rackspace. So we intend to compete aggressively in, what I will call — commodity not being a bad word — the commodity Infrastructure-as-a-Service marketplace,” Ellison said.

While it remains to be seen if Oracle can realize Ellison’s bold vision, it’s apparent that the company is serious about getting into the cloud business. Just over a week ago, the vendor agreed to pay a massive $1.5 billion for Responsys, a maker of cloud-based marketing solutions that competes with Salesforce and boasts more than 450 corporate customers worldwide.