diff --git a/initialize/etcd.go b/initialize/etcd.go
index ad93cb6..4e5e9dc 100644
--- a/initialize/etcd.go
+++ b/initialize/etcd.go
@@ -1,6 +1,7 @@
 package initialize
 
 import (
+	"errors"
 	"fmt"
 	"os"
 	"path"
@@ -38,8 +39,12 @@ func (ec EtcdEnvironment) String() (out string) {
 // Write an EtcdEnvironment to the appropriate path on disk for etcd.service
 func WriteEtcdEnvironment(env EtcdEnvironment, root string) error {
 	if _, ok := env["name"]; !ok {
-		if name := system.MachineID(root); name != "" {
-			env["name"] = name
+		if machineID := system.MachineID(root); machineID != "" {
+			env["name"] = machineID
+		} else if hostname, err := system.Hostname(); err == nil {
+			env["name"] = hostname
+		} else {
+			return errors.New("Unable to determine default etcd name")
 		}
 	}
 
diff --git a/initialize/etcd_test.go b/initialize/etcd_test.go
index 56cd88c..8ee86fe 100644
--- a/initialize/etcd_test.go
+++ b/initialize/etcd_test.go
@@ -86,7 +86,7 @@ Environment="ETCD_PEER_BIND_ADDR=127.0.0.1:7002"
 	}
 }
 
-func TestEtcdEnvironmentWrittenToDiskDefaults(t *testing.T) {
+func TestEtcdEnvironmentWrittenToDiskDefaultToMachineID(t *testing.T) {
 	ec := EtcdEnvironment{}
 	dir, err := ioutil.TempDir(os.TempDir(), "coreos-cloudinit-")
 	if err != nil {
@@ -104,16 +104,7 @@ func TestEtcdEnvironmentWrittenToDiskDefaults(t *testing.T) {
 		t.Fatalf("Processing of EtcdEnvironment failed: %v", err)
 	}
 
-	fullPath := path.Join(dir, "etc", "systemd", "system", "etcd.service.d", "20-cloudinit.conf")
-
-	fi, err := os.Stat(fullPath)
-	if err != nil {
-		t.Fatalf("Unable to stat file: %v", err)
-	}
-
-	if fi.Mode() != os.FileMode(0644) {
-		t.Errorf("File has incorrect mode: %v", fi.Mode())
-	}
+	fullPath := path.Join(dir, "run", "systemd", "system", "etcd.service.d", "20-cloudinit.conf")
 
 	contents, err := ioutil.ReadFile(fullPath)
 	if err != nil {
diff --git a/system/systemd.go b/system/systemd.go
index 5b77f9f..152002a 100644
--- a/system/systemd.go
+++ b/system/systemd.go
@@ -13,6 +13,10 @@ import (
 	"github.com/coreos/coreos-cloudinit/third_party/github.com/coreos/go-systemd/dbus"
 )
 
+// fakeMachineID is placed on non-usr CoreOS images and should
+// never be used as a true MachineID
+const fakeMachineID = "42000000000000000000000000000042"
+
 type Unit struct {
 	Name    string
 	Runtime bool
@@ -163,7 +167,20 @@ func SetHostname(hostname string) error {
 	return exec.Command("hostnamectl", "set-hostname", hostname).Run()
 }
 
+func Hostname() (string, error) {
+	cmd := exec.Command("hostname")
+	output, err := cmd.CombinedOutput()
+	hostname := strings.TrimSpace(string(output))
+	return hostname, err
+}
+
 func MachineID(root string) string {
 	contents, _ := ioutil.ReadFile(path.Join(root, "etc", "machine-id"))
-	return strings.TrimSpace(string(contents))
+	id := strings.TrimSpace(string(contents))
+
+	if id == fakeMachineID {
+		id = ""
+	}
+
+	return id
 }
diff --git a/test.yaml b/test.yaml
deleted file mode 100644
index cbf0170..0000000
--- a/test.yaml
+++ /dev/null
@@ -1,6 +0,0 @@
-#cloud-config
-
-coreos:
-    etcd:
-        discovery_url: https://discovery.etcd.io/0022cb5027f8f5167a874794c3a13e0d
-        bind-addr: $public_ipv4:4001