This bug was fixed in the package cloud-init -
0.7.8-1-g3705bb5-0ubuntu1~16.04.1

---------------
cloud-init (0.7.8-1-g3705bb5-0ubuntu1~16.04.1) xenial-proposed; urgency=medium

  * New upstream release 0.7.8.
  * New upstream snapshot.
    - systemd: put cloud-init.target After multi-user.target (LP: #1623868)

cloud-init (0.7.7-31-g65ace7b-0ubuntu1~16.04.2) xenial-proposed;
urgency=medium

  * debian/control: add Breaks of older versions of walinuxagent (LP:
#1623570)

cloud-init (0.7.7-31-g65ace7b-0ubuntu1~16.04.1) xenial-proposed;
urgency=medium

  * debian/control: fix missing dependency on python3-serial,
    and make SmartOS datasource work.
  * debian/cloud-init.templates fix capitalisation in template so
    dpkg-reconfigure works to select OpenStack. (LP: #1575727)
  * d/README.source, d/control, d/new-upstream-snapshot, d/rules: sync
    with yakkety for changes due to move to git.
  * d/rules: change PYVER=python3 to PYVER=3 to adjust to upstream change.
  * debian/rules, debian/cloud-init.install: remove install file
    to ensure expected files are collected into cloud-init deb.
    (LP: #1615745)
  * debian/dirs: remove obsolete / unused file.
  * upstream move from bzr to git.
  * New upstream snapshot.
    - Allow link type of null in network_data.json [Jon Grimm] (LP: #1621968)
    - DataSourceOVF: fix user-data as base64 with python3 (LP: #1619394)
    - remove obsolete .bzrignore
    - systemd: Better support package and upgrade. (LP: #1576692, #1621336)
    - tests: cleanup tempdirs in apt_source tests
    - apt config conversion: treat empty string as not provided. (LP: #1621180)
    - Fix typo in default keys for phone_home [Roland Sommer] (LP: #1607810)
    - salt minion: update default pki directory for newer salt minion.
      (LP: #1609899)
    - bddeb: add --release flag to specify the release in changelog.
    - apt-config: allow both old and new format to be present.
      [Christian Ehrhardt] (LP: #1616831)
    - python2.6: fix dict comprehension usage in _lsb_release. [Joshua Harlow]
    - Add a module that can configure spacewalk. [Joshua Harlow]
    - add install option for openrc [Matthew Thode]
    - Generate a dummy bond name for OpenStack (LP: #1605749)
    - network: fix get_interface_mac for bond slave, read_sys_net for ENOTDIR
    - azure dhclient-hook cleanups
    - Minor cleanups to atomic_helper and add unit tests.
    - Fix Gentoo net config generation [Matthew Thode]
    - distros: fix get_primary_arch method use of os.uname [Andrew Jorgensen]
    - Apt: add new apt configuration format [Christian Ehrhardt]
    - Get Azure endpoint server from DHCP client [Brent Baude]
    - DigitalOcean: use the v1.json endpoint [Ben Howard]
    - MAAS: add vendor-data support (LP: #1612313)
    - Upgrade to a configobj package new enough to work [Joshua Harlow]
    - ConfigDrive: recognize 'tap' as a link type. (LP: #1610784)
    - NoCloud: fix bug providing network-interfaces via meta-data.
      (LP: 1577982)
    - Add distro tags on config modules that should have it [Joshua Harlow]
    - ChangeLog: update changelog for previous commit.
    - add ntp config module [Ryan Harper]
    - SmartOS: more improvements for network configuration
    - tools/read-version: update to address change in version
    - make-tarball: older versions of git with --format=tar.
    - read-version: do not attempt git-describe if no git.
    - Newer requests have strong type validation [Joshua Harlow]
    - For upstream snapshot versions do not modify git-describe output.
    - adjust signal_handler for version changes.
    - revert unintended change to ubuntu sources list
    - drop modification of version during make-tarball, tools changes.
    - adjust tools and version information.
    - Update build tools to work with git [Lars Kellogg-Stedman]
    - fix pep8 errors in mcollective unit tests
    - mcollective: add tests, cleanups and bug fix when no config in /etc.

 -- Scott Moser <smo...@ubuntu.com>  Thu, 15 Sep 2016 09:57:27 -0400

** Changed in: cloud-init (Ubuntu Xenial)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1621336

Title:
  snapd.boot-ok.service hangs eternally on cloud image upgrades

Status in cloud-init package in Ubuntu:
  Fix Released
Status in snapd package in Ubuntu:
  Triaged
Status in cloud-init source package in Xenial:
  Fix Released
Status in snapd source package in Xenial:
  In Progress

Bug description:
  ==== Begin SRU Template [cloud-init] ====
  [Impact] 
  One of cloud-init's features is to upgrade the system during first boot so 
that it is fully up to date when the user code starts running.

  [Test Case]
  launch an old instance of 16.04 that will need an update to snapd with
  user-data that indicates a package upgrade should be done.

  $ lxc image show ubuntu:74a491804877
  autoupdate: false
  properties:
    aliases: 16.04,default,lts,x,xenial
    architecture: amd64
    description: ubuntu 16.04 LTS amd64 (release) (20160830)
    label: release
    os: ubuntu
    release: xenial
    serial: "20160830"
    version: "16.04"
  public: true

  $ printf "#%s\n%s\n" cloud-config "packages: [snapd]" > user-data

  $ lxc launch ubuntu:74a491804877 xrecreate "--config=user.user-data=$(cat 
user-data)"
  $ lxc exec xrecreate -- tail -f /var/log/cloud-init-output.log

  # you will see the output log hang at:
  # Setting up snapd (2.14.2~16.04) ...

  
  ## Now get new container and patch in cloud-init
  $ lxc launch ubuntu:74a491804877 xpatched
  # let it boot, with no user-data saying to update.
  $ sleep 10

  # update the container to new cloud-init, then clean it to make
  # it look like first boot again.
  $ lxc file push - xpatched/etc/cloud/cloud.cfg.d/update.cfg < user-data
  $ lxc exec xpatched -- sh -c '
      p=/etc/apt/sources.list.d/proposed.list
      echo deb http://archive.ubuntu.com/ubuntu xenial-proposed main > "$p" &&
      apt-get update -q && apt-get -qy install cloud-init'
  $ lxc exec xpatched -- sh -c '
      cd /var/lib/cloud && for d in *; do [ "$d" = "seed" ] || rm -Rf "$d"; done
      rm -Rf /var/log/cloud-init*'

  $ lxc exec xpatched reboot
  $ lxc exec xpatched -- tail -f /var/log/cloud-init-output.log

  # snapd installed and a 'Cloud-init finished' message.

  [Regression Potential] 
  The change to running package installation later in boot will likely affect 
some things.  However, previously a larger set of things were unreliable.  This 
will make things over all more reliable.
  ==== End SRU Template [cloud-init] ====

  I reproducibly run into an eternal hang when deploying services with
  Juju, when it prepares a new xenial testbed. The current xenial cloud
  image does not have the latest snapd, so snapd gets dist-upgraded:

  Preparing to unpack .../snapd_2.14.2~16.04_amd64.deb ...
  Warning: Stopping snapd.service, but it can still be activated by:
    snapd.socket
  Unpacking snapd (2.14.2~16.04) over (2.13) ...
  Setting up snapd (2.14.2~16.04) ...
  [...] hangs

  The postinst tries to start snapd.boot-ok.service on upgrade:

             
|-cloud-init(311)-+-apt-get(577)---dpkg(845)---snapd.postinst(846)---perl(919)---systemctl(922)
             |                 `-sh(354)---tee(355)

  root       922  0.0  0.0  25316  1412 pts/0    S+   06:09   0:00
  /bin/systemctl start snapd.boot-ok.service

  This hangs eternally because:

   - cloud-init's dist-upgrade runs *during* the boot process, so that
  the system is not fully booted yet when this happens (see bug
  1576692); thus multi-user.target is *not* yet active

   - snapd.boot-ok.service is After=multi-user.target

   - "systemctl start" is synchronous by default, i. e. it waits until
  the service is started unless you use --no-block.

  Thus snapd.postinst waits on snapd.boot-ok.service waits on multi-
  user.target waits on cloud-init to finish waits on snapd.postinst to
  finish.

  I think conceptually you shouldn't start snapd.boot-ok.service in the
  postinst; if the system is already booted (manual dist-upgrade) it
  should already be running, and if it does get upgraded during boot
  (with cloud-init) then you shouldn't pretend that booting is already
  finished. So I suggest to use dh_installinit with --no-scripts for
  snapd.boot-ok.service.

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