Is cloud-init required to be installed in all Azure Linux VMs?

Hi Arunprasad K,

Cloud-init is a widely used tool for customizing a Linux VM during its first boot, enabling package installation, file creation, and user configuration. It runs automatically without the need for additional steps or agents, detecting the cloud environment to initialize the system. Consequently, cloud instances are provisioned with networking, storage, SSH keys, and other components already configured.

To address your aspects:

What are the core functions of cloud-init in the Azure environment, particularly during the initial VM boot process?
Cloud-init performs initial configuration tasks on Linux VMs that are launched from generalized or Azure Marketplace images. Initial Boot Configuration executes during the first boot to apply configurations from Azure's provisioning metadata (e.g., hostname, SSH keys, user accounts). Handles user data to run scripts or apply YAML configurations. Installs packages, updates the system, or configures repositories on first boot.

How does cloud-init interact with and/or facilitate the use of Azure Marketplace images, including any implications for vendor-specific configurations or licensing?
Azure's official Linux Marketplace images (Ubuntu, RHEL, CentOS, etc.) come with cloud-init pre-installed and configured. Vendor-specific configurations (e.g., licensing for RHEL/SLES) are often applied via cloud-init.
If you create a custom image, cloud-init ensures Azure-specific configurations (like VM extensions) work correctly. Some vendors use cloud-init to inject license keys or apply post-deployment settings.
If cloud-init is not functioning correctly, the VM might fail to Configure licensing properly, apply network settings, Set SSH access.

What is the relationship between cloud-init and network configuration within Azure Linux VMs, especially concerning the role of dhclient in obtaining IP addresses?
Azure uses DHCP (via dhclient) to assign the primary IP. cloud-init does not replace this but can configure secondary IPs or static routes. cloud-init parses network metadata, writes appropriate Net plan/network scripts and ensures DHCP is used correctly to acquire the IP and DNS configuration. If cloud-init is missing or broken, the network interface might not come up correctly — leading to issues like no IP address assignment, inability to access metadata, or broken SSH access.

Are there any scenarios or use cases within Azure where a Linux VM might be considered fully functional and manageable without cloud-init? If so, what are the potential drawbacks or limitations of not using it?

A Linux VM can be fully functional without cloud-init in cases like custom golden images, pre-configured appliances, or immutable infrastructure where all configurations are baked in. These VMs can run as expected if networking, users, and apps are manually set up or handled by alternate tools (e.g., Puppet, Ansible). However, drawbacks include no automatic SSH key injection, no dynamic disk resizing, no metadata access, and limited compatibility with Azure automation tools (like VMSS or autoscale). Manual Configuration Required to configure User accounts, SSH keys, hostnames, and disk mounts.

Considering best practices and long-term manageability, what is the recommended approach for including or excluding cloud-init in Azure Linux VM deployments?
Always use cloud-init in Azure Linux VMs unless you have a reason to exclude it. It ensures smooth integration with Azure’s provisioning system, automatically handles SSH keys, user setup, and metadata processing. This automation is critical for scaling and long-term manageability.
If you’re using custom images, keep cloud-init installed but disable only unnecessary modules rather than removing it entirely. The only cases where you might exclude it are immutable systems or pre-hardened appliances where configurations never change after deployment. However, removing cloud-init reduces flexibility and can break compatibility with Azure services like VM extensions and scaling features.

For more detailed information, please check: cloud-init support for virtual machines in Azure
cloud-init documentation
How to use cloud-init to customize a Linux virtual machine in Azure on first boot

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