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Microsoft Moves On-Premises Office Servers to a Subscription Model

Last On-Premises Version?

Last March, a Microsoft employee caused a stir with an assertion that Exchange 2019 will be the last on-premises version of Microsoft’s enterprise email server. At the time, my assessment was “I don’t expect Microsoft to ship on-premises versions of Exchange or SharePoint in the way they’ve done in the past because it just doesn’t make sense.”

To put this in context, the vast majority of what you might call utility mailboxes have moved to Exchange Online. The remaining mailboxes need to stay on-premises for some reason (for instance, the organization doesn’t have a reliable internet connection). The current model, based on a major release every three years together with quarterly cumulative updates, needs to be examined in light of a shrinking, but still important, customer base.

Subscription Office

At the “Exchange, Here, There, and Everywhere” session at the Ignite 2020 virtual event, Greg Taylor, Director of Marketing for Exchange, clarified the situation by saying that “the next versions of Exchange Server, SharePoint Server, Skype for Business Server will be available in the second half of 2021, and only be available with the purchase of a subscription license.” In other words:

  • Exchange 2019 is the last version of the classic on-premises product.
  • The Office servers are moving to a subscription-based model.
  • Instead of the current CAL-based licensing model, like Office 365 licenses, customers will pay a monthly fee to continue using Exchange on-premises (or SharePoint or Skype for Business).
  • The subscription entitles customers to receive support, product updates, and security and time zone patches.

Greg didn’t say what name they will give to the subscription-based versions of the Office servers when they appear in mid-2021. Maybe Exchange will be called “Exchange Infinite.” For this article, I’ll refer to the subscription version as Exchange 2022.

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Microsoft says that customers should move to Exchange 2019 if possible before the release of the subscription-based model to enable in-place upgrades. Interestingly, they say that this will mean that “the move to 2019 the last major upgrade they will ever need to do.” I read this to mean that Microsoft will issue regular updates to the subscription version of Exchange to replace the current system of a major release and quarterly cumulative updates.

Keeping Current

Customers will still have to apply the updates issued by Microsoft to keep the subscription-based version current. Microsoft hasn’t said how often updates will appear. My bet is that Microsoft will continue to follow the well-worn quarterly cadence of cumulative updates and that customers will be required to keep their servers running the current or previous update to be supported. Conceivably, Microsoft could keep on pushing out updates for the subscription-based version of the Office servers for many years. Truly, Exchange 2022 (subscription) is the last major release of Exchange.

In-Place Updates

Exchange 2019 customers will be able to perform in-place updates to move to the new server for at least two years following the release of Exchange 2022. No doubt further clarification will appear closer to the date about prerequisites for Windows and other components like .NET. Server upgrades are never quite as straightforward as they seem.

No Great Increase in Functionality

Those anticipating that the release of a new version of Exchange will bring new functionality to on-premises users are likely to be disappointed. While it’s true that Exchange 2019 delivered some new features, end users might not have noticed. The marching orders for the developers to focus on Exchange Online remain, meaning that the only new features likely to appear in Exchange 2022 are those developed for Exchange Online which have no dependency on another Microsoft 365 component. Microsoft is not yet able to confirm what the new version will include. My expectation is the focus will be on long-term sustainability instead of glitzy new features.

More Interoperability

What’s good is that Microsoft is expanding the spectrum of server versions that can co-exist alongside the new release. It will be possible to install Exchange 2022 in organizations with Exchange 2013, Exchange 2016, and Exchange 2019. This step makes it easier to introduce the new server. Once inside an organization, administrators can move mailboxes to the new server, subject to the restriction that all servers within a Database Availability Group (DAG) must run the same version. Well, that’s not true for the subscription version of Exchange, which can co-exist alongside Exchange 2019 in the same DAG,

To help plan Exchange 2019 deployments, Microsoft is making the Excel-based Mailbox Role calculator available to download separately from the server code (the download is now active).

Reasonable Change

Some will hate the idea that Microsoft is moving the on-premises servers to a subscription model. I think it’s a reasonable and logical idea. You can continue using the servers for the foreseeable future or move to Office 365. Or keep on using Exchange 2019 until extended support finishes on 14 October 2025. Five years to figure out your next step. Time to start thinking.


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Comments (4)

4 responses to “Microsoft Moves On-Premises Office Servers to a Subscription Model”

  1. <p>One of the biggest problems with Exchange Online is that it is hosted by Microsoft.</p><p>Now that Privacy Shield is defunct and the SCCs validity also being in doubt (they use the same premise, that the data will be held to equivalent standards to the EU and that the holder (Microsoft) won't hand over the data to third parties, including the US Government without permission from the data owner or without a valid EU warrant, but the Patriot Act, CLOUD Act, FISA Court and National Security Letters make a mockery of that promise), it is not tenable to use any cloud service with ties to the USA, because the US Government has proven that it cannot be trusted to follow through on treaties it signed up to.</p><p>They signed up to Privacy Shield half a decade ago. In 2016, 2017, 2018, 2019 and 2020 they received non-compliance notices, including having failed to appoint a permanent ombudsman to deal with EU enquiries and complaints, let alone take action on the above mentioned acts etc. to ensure they cannot encroach on EU citizens' rights, as agreed to.</p><p>That means that you either need a wholly independent, EU only Exchange hoster or you need to run your own Exchange servers, if you want to stick with Exchange. (Or any other Microsoft services.)</p>

    • <blockquote><em><a href="#16919">In reply to wright_is:</a></em></blockquote><p>I thought that Microsoft set up data centers in Germany with Deutsche Telekom to handle that issue. They will run the data center but Deutsche Telekom will own the data.</p>

      • <blockquote><em><a href="#16921">In reply to AnOldAmigaUser:</a></em></blockquote><p>Sorry, just seen your answer. They kicked DT out and made their own data center, which is then, of course, covered by the CLOUD Act, the Patriot Act and NSL.</p>

  2. <p><span style="background-color: rgb(245, 248, 250); color: rgb(20, 23, 26);">What happens to On Premise Exchange customers with Software Assurance are they entitled to this new subscription version?</span></p>

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Tony Redmond has written thousands of articles about Microsoft technology since 1996. He covers Office 365 and associated technologies for and is also the lead author for the Office 365 for IT Pros eBook, updated monthly to keep pace with change in the cloud.