Description of problem:
Running byo playbook from openshift ansible fails with following error for system container install.

hostname module cannot be used on platform Linux (Red hat enterprise linux atomic host)

Version-Release number of the following components:
rpm -q openshift-ansible
openshift-ansible-3.7.0-0.117.0.git.0.d2a5cea.el7.noarch

rpm -q ansible
ansible-2.3.1.0-3.el7.noarch

ansible --version
ansible 2.3.1.0
  config file = /etc/ansible/ansible.cfg
  configured module search path = Default w/o overrides
  python version = 2.7.5 (default, May  3 2017, 07:55:04) [GCC 4.8.5 20150623 (Red Hat 4.8.5-14)]

Steps to Reproduce:
Run openshift ansible playbook, I am attaching inventory

Actual results:
Please include the entire output from the last TASK line through the end of output if an error is generated
hostname module cannot be used on platform Linux (Red hat enterprise linux atomic host)
<xx.xx.xx.compute.internal> (0, '\r\n{"msg": "hostname module cannot be used on platform Linux (Red hat enterprise linux atomic host)", "failed": true, "invocation": {"module_args": {"name": "xx.xx.xx.compute.internal"}}}\r\n', 'Shared connection to xx.xx.xx.compute.internal closed.\r\n')
fatal: [xx.xx.xx.compute.internal]: FAILED! => {
    "changed": false,
    "failed": true,
    "invocation": {
        "module_args": {
            "name": "xx.xx.xx.compute.internal"
        }
    }
}

Expected results:
playbook should pass

Additional info:
Attaching ansible log with -vvv and inventory file