At IT/Dev Connections in September I participated in a Q&A panel discussion on the final afternoon. One of the questions from the audience was whether we thought there would be another on-premises release of Exchange after Exchange Server 2016.

It’s always an interesting topic for discussion, and the answers given by the different panelists were varied, though we were all sharing opinions only, not anything official or based on insider information.

When you really consider all the possible answers here it isn’t clear what will happen in the future. A year after the release of Exchange Server 2013 Microsoft said they had no plans to stop delivering on-premises versions of Exchange. And they certainly followed through with that promise, releasing Exchange Server 2016 this year.

But as some commentators have said, Exchange Server 2016 feels very much like it could have been called Exchange Server 2013 Service Pack 2. That may seem unfair to Microsoft’s development teams, but it speaks more to the similarities on the surface than a lack of new features or improvements under the hood (of which there are many in RTM, and many more in the pipeline).

That similarity opens up the possibility that no major version of Exchange Server will ever be released again, and that we’ll simply see a rolling series of cumulative updates that provide new features and improvements to on-premises customers in a similar way to how new builds are continuously rolled out to Exchange Online.

On the other hand, Microsoft may be forced to release at least one more on-premises version as a rebranding exercise. The product name “Exchange Server 2016” will start to look a bit “old” in 2-3 years time, and customers will be looking for something newer. Yes, I know this is a trivial thing, but some people will always assume that a product with an “old” name must be inferior to something else with a “new” name. Perhaps we’ll see Exchange shift to a simpler version number instead of the traditional year-based names.

During the IT/Dev Connections panel I also pointed out that marketing teams need something they can turn into a launch event. A major new product release like Exchange Server 2016 is an opportunity for marketing to do their thing. On the other hand, marketers must also adjust to the new reality as IT pros have needed to, that software is turning into services and “continuous marketing” might be their equivalent of what IT pros are dealing with today.

My personal opinion is also that Microsoft will not abandon a sizeable on-premises market. As long as that market is large enough and the demand is there to justify serving it with new products then Microsoft will continue to do so. As Microsoft said in 2013…

Many customers will remain on-premises or in hybrid deployments for the foreseeable future, and we want to keep delivering our newest and best features to them. Fortunately, our development process allows us to do that. We have a single code base that serves both cloud and on-premises customers, so we can deliver innovation to both groups.

How long will that customer base continue to exist? It’s hard to say. The momentum continues to swing in the direction of the cloud, with Microsoft claiming in May 2015 that 35% of Exchange installed seats are in Office 365. Coming from Microsoft it’s hard to discredit that claim. The Radacati Group puts the number at 20% (PDF) including Office 365 and hosting partners. Whether it’s 20% or 35%, compared with Tony Redmond’s analysis in 2013 of between 3-5% of mailboxes being in Office 365 that is a huge leap in just 2-3 years. And all indications in the market are that the pace is only accelerating.

When will it reach 50%, in another year? Faster? At what point will the on-premises market be too small for Microsoft to ship a new on-premises Exchange Server? In my mind it could be just 2-3 years from now. That’s my honest, personal opinion. I’ll be happy if I’m wrong, because on-premises Exchange is an enjoyable product to work with. Or maybe I’m alone in that sentiment.

But we also have to consider Hybrid customers and those who have integrated their on-premises Active Directory with Azure AD and Office 365. Those customers need an on-premises Exchange server for management purposes, even if they have migrated all mailboxes and other workloads the on-premises server normally performs to the cloud. Currently a full installation of Exchange Server (fortunately with no license cost thanks to the Hybrid License) is required to perform that management role in a supported manner. Other third party tools, custom scripts, or direct ADSEdit hacks remain unsupported by Microsoft.

Clearly a full Exchange Server install is overkill for such a role. Many of the customers I’ve worked with have grumbled at the notion of maintaining an Exchange server on-premises after they’ve migrated email to Office 365. Even running it in Azure as a VM can be expensive due to the technical requirements to stay within Microsoft’s support boundaries. What would make more sense in the future is for a lightweight management install to become available for Exchange, either as software that you install on a VM or as a pre-installed virtual appliance. Perhaps even as an Azure-hosted service. Or perhaps the development of Azure AD Domain Services and the ability to domain-join workstations and servers to Azure AD will negate the need entirely, with no more “legacy” Active Directory in play.

The future is exciting, but unclear. And that can be uncomfortable for IT professionals who are not happy watching the jobs they enjoy being disrupted by cloud services. I get emails every week from people asking for advice about a career working with Exchange. My advice today is that Exchange Server skills are still of high value and in healthy demand, but you should start learning Office 365 as well to ensure your skills remain valuable in the next 2-3 years.

There’s very little required to get started. A free trial of Office 365 lasts for 30 days, which is enough time to learn quite a lot about it. Buying 1 or 2 licenses for ongoing learning is also a good investment (all you need is 1 license really, and you can run it as your personal mailbox if you like). $10/yr or so for a custom domain name makes your Office 365 tenant as legitimate and realistic as they come.

For training materials, we’ve written Office 365 for Exchange Professionals just for people like you. We keep it updated as Office 365 changes, and it stands today as the most comprehensive and up to date guide available. It’s also written by independent experts, all of us Microsoft MVPs, so you can be sure we’re telling you the real story based on our experiences in the field.

At least we can’t say working in IT is boring.

About the Author

Paul Cunningham

Paul is a former Microsoft MVP for Office Apps and Services. He works as a consultant, writer, and trainer specializing in Office 365 and Exchange Server. Paul no longer writes for Practical365.com.

Comments

  1. joe

    The answer turns out to be no, Exchange Server 2019 is coming out H2 of 2018.

  2. Huy Pham

    Thank for your information & analyze !!!

  3. Chuck petree

    We are also not even having anyone wanting to install on site exchange. We have probably installed a handful in the last 2 years. Everyone else is migrating to office 365.

  4. Chuck petree

    Work for a Microsoft Solutions Provider and Microsoft advisory services will no longer be supporting exchange on premises. They told one of our guys today they suggest not installing any more on premise exchange servers.

    1. Paul Cunningham

      The support lifecycle for Exchange is clearly defined, they don’t just drop support for the product.

    2. Huy Pham

      Agreed with you, I had opened support ticket last month, but they said having plan to retire on-premise product support. But we can try Enterprise Agreement 24×7 Support

  5. Keshav

    Good Article Paul, with most required information.

  6. Amine

    I found Office 365 migrations fun and interesting: you got to plan a lot though!!!
    Exchange is a fun product whether it is online or on-prem: i don’t have prefer over which one: as long as i am able to architect it the way my clients seem productive, of course.

  7. Juan José de León

    Great analysis, i agree about the state of Exchange On-premises. Right now the Cloud seems the direction for the mailboxes unless some compliance and regulatory requirement.

    Still the cloud needs to be manage.

  8. Rajendra Sonawane

    Hi,

    It is a great update and help, thank you so much.

    Raj

  9. Greg

    Large global organisations will never be able to fully transition their mail environment to the cloud due to the complexity of their environment and the legal implications of doing so. I don’t see the need for good exchange admins going away for quite some time.

  10. Michael Minter

    Just so you know. There is no Exchange Hybrid license key for Exchange Server 2016.
    That was a temporary solution for customers who needed to be able to migrate off of Exchange 2003 and 2007 platforms without having to pay for an extra Exchange server on premises during their migration. The Hybrid license is only available for Exchange 2010 or Exchange 2013 on premises hybrid servers.

    If you need to keep an on premises hybrid server for management of AD objects, you need to plan on purchasing the Exchange Server 2016 server license.

    https://products.office.com/en/exchange/microsoft-exchange-server-licensing-licensing-overview

  11. Edgar

    I think Microsoft is thus scaring some customers in the future if Microsoft will not give a clear statement. This is exactly the situation when IBM stopped announcing new roadmaps for IBM Notes in the past. At that time, many customers changed from Notes to Microsoft Exchange. In the Enterprise environment you often receive questions, of what would be a possible alternative product if MS Exchange will become a pure cloud product. It’s a pity that Microsoft does not remain here faithful and reveals the future.

  12. Andy

    I’ve been concerned about my job security ever since I fully understood the concept of a cloud. Like you, I hope we are wrong about Exchange on-premises disappearing. I like working with it, too!

    1. Mayor Adam West

      These are my thoughts exactly.

      Just when I began enjoying learning and managing Exchange, we started migrating our clients to ‘the cloud.’

      I need excuses to keep em in house! Haha

  13. Hunter Brelsford

    While I agree with this article in the exchage sense i think its actually frightenting that IT engineering jobs in general will start to go away in in droves as PaaS really starts to become a universal application platform for standard large scale aplications and inhouse custom developed applications.

    1. Eric

      Change is inevitable. The jobs won’t really “go away” but they will certainly change hands. You may no longer be working for a large corporate IT company but with an integrator or service provider. Someone has to keep the lights on.

  14. Howie

    I don’t think on self hosted will go go away. I can see more hybrid deployments since I would have issues with a complete 365 deployment. We have over 600 mailboxes with only 120 active at a time so what that mean to for MS is a payment of 5 times I would normally pay to keep old mailboxes. That is crazy Exchange is good product that doesn’t mess-up much. Every version gets better and more reliable. With the cost of HW so cheap and VM pricing going down everyday why not host it yourself? Where MS big push came with 365 is they stopped small business server you know how many MS providers we pissed about this. No they have all small business users that use to get a SBS server.

    Now how safe is your data with MS? Can they look at it? Can lawyers get access to it without our knowledge? What if they change the pricing to whatever they want? What happens if you miss some payments? I have seen cloud storage places go under and your data is lost because you don’t own it. How can you prove you own that data?

    MS like this because the control the amount of users to exact number, get you hooked on an easy product to use and support. Everyone know it turned out for the celebs with another companies online storage so how is your data protected. I bet MS won’t tell you either..

  15. Jesper Pedersen

    I think we will see atleast one major release, and perhaps Microsoft will just call i MS Exchange 365 on-premises.

    As long as many customers keep their datacenters, the demand for on-premises will continue.
    As for now, many dont trust the cloud storage, and will have a need to keep sensitive data off the cloud.
    I think a hybrid solution will expand during the next years, where some data can be stored in cloud services and some wont.

  16. Ry

    Good Article Paul!

    I have to say, I do agree. Exchange will be around for us Exchange Admins to look after way into the future, so there’s no mass panic there. Of course though we need to move with the times, and learning 365 is not only a future skill-set but a present one. As long as we can stick with these skills we’ll all still be working on the platform we’ve all chosen as a career.

    Don’t panic, just change the path you walk on! Simple.

  17. rino19ny

    let’s keep it simple. as long as the rest of the world don’t have reliable Internet connection, Exchange on-premises will always be there.

      1. Gizelle

        Places like South Africa where most businesses are running on 4 mbps ADSL connections and reliable 10 mbps fiber connections are either not available or too costly for small to medium businesses.

        And going beyond that, even the 100 mbps fiber connections can be highly unreliable.

      2. John Schmidt

        Hamilton, Montana where the local telco provides 9 down and .5 up on a good day. There are more rural locations throughout the world that need better bandwidth.

      3. John Schmidt

        AND . . . less than 5 person offices on dsl with 1mbit or less up and hosted exchange with other 365 apps is a challenge. Better to go with RDSH at 26K. And then there is the issue of attaching 5Mb picture files to an email. Things become very slow doing that even with RDSH. I can’t imagine how much slower it would be with 365, not to mention the limitation on the number of contacts especially for a salesperson.

        I think 365 is a great solution for most, but, not all. I hope M$ improves 365.

    1. Peter Cooney

      How do you think the email is delivered? its clearly reliable, most of the world’s commerce is transacted on it.

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