Exchange Server Subscription Edition Arrives in Summer 2025

Not Much Excitement but an Important Step for Exchange Server and its Customers

In a May 7 announcement, Microsoft revealed details about Exchange Server Subscription Edition (SE), which they expect to ship in early Q3 2025 (think July or August). Following along the line adopted by SharePoint Server Subscription Edition, Exchange Server SE will require users to have subscription licenses (like Exchange Online), or licenses purchased through Software Assurance. The old perpetual server and Client Access Licenses (CALs) used by Exchange 2019 and all prior versions are not supported.

This evolution isn’t real news because Microsoft has been talking about the transition since June 2022. What’s different now is that Microsoft has given dates and some insight into what Exchange Server Subscription Edition will be.

Running The Same Code

One of the interesting points in the announcement is Microsoft’s assertion that Exchange Server SE runs the same code as Exchange Server 2019 CU15, the final cumulative update for Exchange Server 2019 (aka 2024 H2 CU). CU15 is scheduled to include some new functionality such as TLS 1.3 support and the reintroduction of GUI-based certificate management in the Exchange admin center, but essentially CU15 is the launch vehicle to bring on-premises customers into the world of ongoing subscriptions. It will also support Windows Server 2025 when that O/S is available.

To speed the transition, Microsoft will create Exchange Server SE by relabelling CU15 (plus any relevant security updates) with a new name, build, and version number. You’ll be able to transition to “the RTM release of Exchange Server SE” (not much release to manufacturing involved here) by doing an in-place upgrade from Exchange Server 2019 CU15. Microsoft stresses that the upgrade is identical to the process of installing a cumulative update. And so it should be, considering the minimal changes in the code.

“Legacy updates” (install Exchange on a new server and move mailboxes) is also supported. This is the route forward for organizations running Exchange 2016 servers. The problem for organizations with earlier servers is that these servers aren’t supported alongside Exchange 2019, so some more work is needed to get to a supported platform. It is important to run a supported version of Exchange Server, especially if you don’t want Microsoft to block the flow of email to Exchange Online. If you plan to use Exchange Server SE, it’s best to get to Exchange Server 2019 CU14 now and upgrade to CU15 once Microsoft makes that update available.

Future Subscription Upgrades

Following the transition to Exchange Server SE, Microsoft will ship two updates annually like the current cadence. Organizations will have to install the updates to remain supported. Microsoft expects to deliver the first functionality update to appear in October 2025. The announcement lists four updates they expect to include in Exchange Server SE CU1.

Looking at the set, on-premises administrators are likely to be disappointed. Using Kerberos for server-to-server communications instead of NTLMv2 is goodness, and you can’t argue against the removal of Outlook Anywhere (RPC over HTTP) or starting the process to remove remote PowerShell and use REST-based Admin APIs for Exchange Server instead. But that’s it.

The reason for the lack of new Exchange Server functionality is simple. A declining installed base throws off less revenue to fund engineering work. Priority is given to improving security (Kerberos and pruning old protocols) instead of the whiz-bang-wallop crescendo of new features experienced in the cloud. Your future Exchange Server will be more secure and easier to manage (there will be just one option), but it won’t set any fires blazing in respect of new features.

The Licensing Conundrum

Returning to the licensing change, given the sometimes puzzling nature of Microsoft software licensing rules, it’s hard to give definitive advice on exactly how the transition will occur for individual companies. The best course of action is to consult a Microsoft licensing specialist to understand how the change to subscription-based licensing will affect your situation (costs), taking two major factors into account:

• What plans exist to continue operating Exchange Server (how many servers, mailboxes, etc.) and for how long?
• If a current enterprise agreement is in place with Microsoft and if the agreement will expire before or after the introduction of Exchange Server SE. It could be advantageous to negotiate a new agreement covering Exchange Server SE, if that’s your strategic direction.

On to Exchange’s 30th Anniversary

If all you need (and want) is a solid, highly functional email server for an on-premises organization, then Exchange Server SE is the future that will bring the server to its 30^th anniversary in 2026 and beyond. For everyone else, come on over to Exchange Online. It’s pretty nice there.