The Microsoft Exchange Server Subscription Edition (SE) represents a significant change in Microsoft’s approach to on-premises email management solutions. This white paper analyzes the new features, licensing model changes, implementation timeline, and migration options for organizations using older Exchange Server versions. It is intended for IT decision-makers and system administrators preparing for this significant change in their communication infrastructure.

Since its first announcement in 2020 with the unofficial code name “vNext”, the Microsoft Exchange Server Subscription Edition (SE) promises to be the final version of Exchange Server for on-premises installation. In April 2025, Microsoft revealed significant information about this upcoming release, including changes in pricing, release timeline, and technical specifications.

This white paper examines the substantial changes brought by Exchange Server SE and provides guidance for organizations considering migration to this new version.

Release Timeline

The Exchange Server Subscription Edition (SE) will be globally available in July 2025. The first release will be the Exchange Server SE RTM (Release to Manufacturing), with the first Cumulative Update (CU1) scheduled for the end of 2025.

Critical milestones:

  • July 2025: Release of Exchange Server SE RTM
  • End of 2025: Release of Exchange Server SE CU1
  • October 14, 2025: End of support for Exchange Server 2016 and 2019

Exchange Server SE RTM: What Is It?

The Exchange Server SE RTM is the first release of the “vNext” Exchange Server series. It will have code parity with Exchange Server 2019 CU15, meaning there will be no significant functional differences between Exchange Server 2019 and Exchange Server SE at initial release.

However, the primary difference lies in the upgrade model: Exchange Server SE introduces a new era where Exchange upgrades will be as simple as installing a new Cumulative Update.

Licensing and Pricing Model Changes

Transition to Subscription Model

As the name suggests, the Exchange Server Subscription Edition (SE) will follow a subscription model instead of the traditional one-time purchase model. The only way to obtain the new Exchange Server with a free license is to use it in a hybrid environment, where a free hybrid license will be provided by the Hybrid Configuration Wizard.

Price Increases (From July 2025)

Microsoft announced the following price increases to take effect from July 2025:

  • 10% increase in prices for standalone on-premises server products (Exchange Server, Skype for Business Server, and SharePoint Server)
  • 15% increase in Core CAL Suite
  • 20% increase in Enterprise CAL Suite

Cloud equivalent services are not affected by these increases, which provides an additional incentive to transition to the cloud.

New License Requirements

With Exchange Server SE, you still need Server licenses and CALs (client access licenses) for each user or device accessing the server. However, there are additional requirements:

  • Either you need a cloud subscription license for each user (preferably E3 or E5)
  • Or, if you don’t choose a hybrid solution, your licenses must have “Software Assurance” – an additional licensing option that increases your license prices in exchange for version upgrade licenses

Technical Changes and New Features

Coexistence Limitations

A significant change in Exchange Server SE is the approach to coexistence with older versions:

  • The RTM does not support coexistence with Exchange 2013
  • The CU1 does not support coexistence with Exchange 2013, 2016, or 2019

This means the official plan involves installing Exchange Server RTM, retiring all other Exchange versions in less than six months, and then installing Exchange Server SE CU1.

In-place Upgrade

One of the most significant improvements is the ability to perform an in-place upgrade to Exchange Server SE. The experience will be similar to installing a Cumulative Update (CU), eliminating the need for complex migration projects.

However, this option will only be available if you are already using Exchange 2019 on Windows Server 2022 or Windows Server 2025. A traditional migration from Exchange 2016 to Exchange SE will also be possible.

Modern Lifecycle Policy

Exchange Server SE will follow the Modern Lifecycle Policy instead of the Fixed Lifecycle Policy that applied to previous versions. This means:

  • Change notification: Minimal 30-day notice before action is required to avoid significant degradation of normal product use
  • Continuity and transition notification: Guarantee that Microsoft will inform at least 12 months and up to 3 years before terminating support for a product

Other Technical Changes

  • The default authentication protocol will change from NTLMv2 to Kerberos
  • Remote PowerShell (RPS) protocol will be phased out. It will be supported in CU1, but after that, you’ll need to transition to the Admin API, which will include a set of REST-based APIs
  • Outlook Anywhere will be phased out from CU1

Migration Options for Organizations

Given that both Exchange 2016 and Exchange 2019 will reach end of support on October 14, 2025, organizations have the following options:

  • Migrate to Exchange Online before October 14, 2025
  • Migrate to Exchange 2019 as soon as possible, then perform an in-place upgrade to Exchange Server SE
  • Traditional migration from Exchange 2016 to Exchange Server SE upon its release

It’s worth noting that the timeline is extremely limited – organizations will have only three months from the release of Exchange Server SE RTM until the end of support for versions 2016 and 2019.

Use Case Analysis

Case 1: Organizations with Exchange 2013

Organizations still using Exchange 2013, which reached end of support on April 11, 2023, will not be able to directly upgrade to Exchange Server 2019 CU15 or Exchange Server Subscription Edition RTM. The only option is to migrate to a newer version before installing Exchange SE.

Case 2: Organizations with Exchange 2016

Organizations with Exchange 2016 will be able to perform a traditional migration to Exchange Server SE when it is released. However, with support ending on October 14, 2025, the time frame is extremely limited.

Case 3: Organizations with Exchange 2019 on Windows Server 2022/2025

These organizations are in the best position, as they will be able to perform an in-place upgrade to Exchange Server SE, similar to installing a Cumulative Update.

Case 4: Hybrid Environments

Organizations already operating in hybrid environments will benefit from the free hybrid license provided by the Hybrid Configuration Wizard, eliminating the need to migrate between on-premises environments.

Strategic Considerations

Exchange Server SE as a Push Towards Cloud

The transition to a subscription model and increases in on-premises solution costs can be seen as a further effort by Microsoft to push organizations towards the cloud. With Exchange Online receiving critical security and feature updates first, the overall cost of maintaining on-premises infrastructure increases, creating even fewer reasons not to transition to the cloud.

Cases for Maintaining On-Premises Exchange

Despite the push towards the cloud, Exchange Server SE serves two critical purposes:

  • Supporting hybrid environments without the need to migrate mailboxes between on-premises environments
  • Providing an on-premises Exchange solution for organizations unable to maintain their data in the cloud due to specific laws and regulations
  1. Immediate assessment: Identify current Exchange version and operating system
  2. Inventory: Record environment size, number of mailboxes, shared folders, and special configurations
  3. Gap analysis: Identify technical and operational gaps that need to be addressed before migration
  4. Cost analysis: Compare the cost of remaining on-premises with SE subscription versus migrating to Exchange Online
  5. Migration planning: Develop a detailed migration plan and timeline based on the selected strategy
  6. Preparation: Upgrade to Exchange 2019 on Windows Server 2022/2025 (if possible) to simplify future migration
  7. Testing: Test the migration process in a test environment before implementing in the production environment

In Summary

The Microsoft Exchange Server Subscription Edition (SE) represents a significant change in how organizations will install, manage, and license on-premises Exchange Server. While offering simplified upgrades and continuous support, changes in the licensing model and increased costs further push organizations towards cloud solutions.

With Exchange 2016 and 2019 reaching end of support on October 14, 2025, organizations must begin planning their migration strategy immediately. Whether transitioning to Exchange Online, upgrading to Exchange 2019 as an intermediate step, or directly migrating to Exchange Server SE, preparation must start now to ensure a smooth transition.

Frequently Asked Questions

Q: Can I migrate directly from Exchange 2013 to Exchange Server SE? A: No, Exchange Server SE RTM does not support coexistence with Exchange 2013. You will need to first migrate to a newer version.

Q: Will there be a public beta version of Exchange Server SE? A: No, there are no plans for a public beta version of Exchange Server SE.

Q: What happens if I don’t upgrade before the end of support for Exchange 2016/2019? A: After October 14, 2025, Exchange 2016 and 2019 will no longer receive security updates, making them increasingly vulnerable to security threats.

Q: Will I need to purchase new licenses for Exchange Server SE if I’m in a hybrid environment? A: No, in a hybrid environment, you will receive a free hybrid license through the Hybrid Configuration Wizard.

Q: How frequently will Cumulative Updates be released for Exchange Server SE? A: Microsoft has not announced a specific schedule for CUs beyond the CU1 planned for the end of 2025.