Nextcloud on Azure: Better to Use Azure File Share as External Storage or Keep Everything on the VM?

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I’m currently setting up a Nextcloud environment in Azure and need to integrate an existing departmental network drive. The goal is to make this drive available to users through Nextcloud.

Now I’m trying to decide between two architecture options and would appreciate insights from people who have experience with Azure + Nextcloud:

Option A:
Deploy a Nextcloud web server (VM) and mount an Azure File Share as External Storage in Nextcloud.

Option B:
Provision a VM and place both the Nextcloud application and all user data directly on the VM’s attached storage (Premium SSD v2).

From a best-practice perspective, Nextcloud recommends separating web server and storage components. Azure File Shares also offer scalable, shared storage without growing the VM disks. However, some admins report performance issues (latency, metadata operations, many small files) when using SMB/NFS as the main backend for active workloads.

Question:
Based on your experience in Azure and/or with Nextcloud, which approach would you recommend for this kind of use case?
Any pros/cons, performance notes, or “lessons learned” would be appreciated.

This is probably too late for you, but I wanted to chime in since I have just tried to install Nextcloud in Azure Container Apps using Azure File share as storage.

I tried to use an SMB file share at first, which did work for storing files but not installing apps. SMB file share doesn’t support POSIX executable flags, so installing something like Collabora Online server is not possible (you can install it but it doesn’t run).

Next I’m trying an NFS file share. It should allow executing files, but there are a few caveats:

  • Storage Account must be placed inside a Virtual Network
  • only the more expensive Premium storage tier is available
  • Backup recovery vault & automated backups are not available, need to create a backup solution manually by using snapshots

I don’t have a large environment so I’m not sure how Azure Files performs under load. If you are using Premium SSD storage, Hot storage tier and use Redis cache for session management, I don’t think performance or file synchronization will be an issue.