Latest / The Windows Podcast with Fexingo: Microsoft, PC, and Enterprise Windows Conversations / Why Windows Update Is Becoming a Subscription
Transcript
- Lucas: If today's tech conversation gave you something usable, there is a quiet story underneath it — the economics of how this show stays ad-free. We will get to that in a minute, but first, let me ask you something, Luna. Luna: I am ready. Lucas: When was the last time you thought about how Windows updates actually get to your machine? Not the feature updates — the monthly security patches. Luna: Honestly, never. I assume they just show up via Windows Update, and IT handles the rest. Lucas: Right. And that has been the assumption for decades. Windows Update was just a built-in utility. Free. Indefinite. But Microsoft is quietly changing that for enterprise customers, and it is a bigger deal than most IT buyers realize. Luna: How quietly are we talking? Is this a footnote in a licensing PDF? Lucas: Pretty much. Starting with Windows 11 Enterprise, Microsoft introduced what it calls 'Windows Subscription Supplemental' — a small add-on fee per user per month to continue receiving security updates beyond the standard ten-year support lifecycle. But the twist is that even within that lifecycle, some update channels are now gated behind higher Microsoft 365 tiers. Luna: So the free Windows Update we grew up with is effectively becoming a subscription feature for businesses? Lucas: Correct. And the numbers are not trivial. For a company with, say, ten thousand devices, the difference between Microsoft 365 E3 and E5 is roughly fifteen to twenty dollars per user per month. Part of that delta is for security and compliance tools, but a growing slice is specifically for 'Windows Update for Business' capabilities that used to be included in the base OS. Luna: So what exactly does E5 get you that E3 doesn't, on the update side? Lucas: The biggest one is 'Update Compliance' telemetry — detailed reporting on patch status across the fleet. Also 'Windows Update for Business' deployment rings with more granular control. Microsoft has been slowly moving those features out of the OS itself and into the subscription. If you stay on E3, you still get patches, but you lose the ability to stagger rollouts or get advanced troubleshooting data without third-party tools. Luna: That sounds like a lose-lose for IT departments. Either pay more for the same control you used to have, or accept less visibility. Lucas: Exactly. And here is the concrete anchor for today: a mid-sized financial services firm I spoke with last month told me their annual Windows-related licensing cost jumped 18 percent year over year — not because they added seats, but because Microsoft reclassified certain update management features as 'premium' in the latest licensing guide. They had to upgrade two hundred users to E5 just to keep their compliance reporting pipeline intact. Luna: And that is purely for security patches. Not even new features. Lucas: Right. The feature updates are a separate conversation. But on the security side, this is a material shift. Windows has always been the backbone of enterprise desktop, and the assumption that patching is a sunk cost — already paid for in the device price — is eroding. Luna: Has Microsoft said anything publicly about this being a deliberate strategy? Lucas: Not explicitly. But the pattern is consistent with how they have moved other products — Office, Dynamics, Azure — to subscription models. Windows is the last holdout, and they are doing it incrementally. The term 'Windows as a Service' was originally about continuous updates, but the business meaning is becoming 'Windows as a Subscription.' Luna: And speaking of subscriptions being a deliberate strategy — Lucas, you mentioned the economics of this show staying ad-free. How does that connect? Lucas: It is a similar principle, actually. We deliberately chose not to run ads because we wanted the conversation to be unsponsored and independent. But a show like this requires real resources — hosting, research, production time. A small group of listeners already helps cover that through buy me a coffee dot com slash fexingo, and that support is what keeps us from having to chase sponsorship dollars or sell listener data. Luna: Yeah, and it is not about expecting everyone to chip in. But if you get value from the deep dives, the model is simple: listener-funded, no ads, no outside pressure. It is a clean way to operate. Lucas: Exactly. And it ties right back to what Microsoft is doing — when the funding model shifts, the incentives shift too. We prefer ours to stay transparent. Now, back to Windows updates — there is another angle I want to dig into. Luna: What is that? Lucas: The extended security updates program. Historically, when Windows reached end of support, Microsoft offered paid patches for up to three more years. Those fees were steep — often hundreds of thousands for large fleets. But now, with Windows 11, the extended update period is being folded into the subscription tiers rather than a standalone contract. Luna: Meaning you cannot just buy patches a la carte anymore. You have to be in a higher Microsoft 365 tier to even be eligible. Lucas: Correct. That change happened in late 2025, quietly updated in the Product Terms document. If your organization is still on Windows 10 and you want extended patches beyond October 2025 — which is now last year — you need an E5 license or an E3 with the 'Windows Subscription Supplemental' add-on. The old standalone Extended Security Update contract is no longer available for new customers. Luna: So organizations that delayed migration to Windows 11 are now forced into a more expensive licensing path if they want to stay secure. Lucas: Exactly. And this is not a hypothetical. A healthcare system I know of, about twelve thousand endpoints, they were planning to stay on Windows 10 until 2027. Their IT budget just got hit with an extra three hundred thousand dollars annually because of this change. They had not budgeted for it. Luna: That is a concrete number. Three hundred grand just to keep getting patches. Lucas: And that is for patches only. No new features, no support tickets beyond security. It is pure maintenance cost. Luna: So what should IT leaders do right now if they are listening? Lucas: A few things. First, audit your current Microsoft 365 licensing and map it to your actual device fleet. You might have users on E3 who are fine for productivity but missing update management features you rely on. Second, look at the Windows 11 hardware requirements — if you have devices that are not compatible, the cost of new hardware plus the higher licensing tier might push your total cost of ownership up significantly. Third, start treating Windows Update as a line item in your budget, not a free utility. Luna: And what about smaller businesses that do not have dedicated IT procurement teams? Lucas: They are actually more exposed, because they tend to buy devices with Windows 11 Pro pre-installed, which includes basic update functionality. But Pro does not include the enterprise-grade deployment controls. If they ever need to scale or demonstrate compliance for an audit, they will hit the subscription wall. My advice: consider Microsoft 365 Business Premium, which bundles a lot of the update management features at a lower per-user price than Enterprise E3. Luna: So the key takeaway is that Windows update is no longer a fixed cost baked into the OS. It is now a variable cost tied to your licensing tier. Lucas: Exactly. And the trend line is clear. Over the next two to three years, I expect Microsoft to continue pulling more features out of the base OS and into the subscription. The question is whether regulators or customers push back. So far, the pushback has been minimal because the changes are buried in licensing documents that very few people read. Luna: Which is exactly why we are talking about it today. Lucas: Right. This is the kind of structural shift that quietly reshapes IT budgets for years. And if you are the person signing those licensing agreements, you need to know what you are actually paying for.