This account is not supported in Outlook for Windows due to the license provided by your work or school

Just to confirm the same exact experience here - I have been an Exchange Online P1 user for about 10 years at this point and have always been able to connect the mailbox to licensed copies of Outlook, as well as the included Windows mail client for years along with every other mail client going on mobile including Gmail and Apple mail.

For what it's worth, ALL of these mail clients can still connect to my mailbox without issue. So to be clear there is zero technical reason for this now happening.

So - Microsoft are arbitrarily reducing the functionality of their lower paying customers to try and walk you up the subscription tier by almost forcing you to pay for Business Standard or higher because the experience is going to be pretty much useless for 90% of those users.

Exchange Online P1 has for years been a great service at a reasonable cost and many customers of mine use them to provide contractors and other shorter term collaborators access to a valid business email account while they work together. Usually these people have paid Office licenses of their own and they 100% SHOULD NOT need to pay for the license again.

I sincerely hope that Microsoft get a public flogging for this because it is a pure greed move. No technical reason, just making people's experience worse to try and screw more $$$ out of them.

I will be addressing this with my partner managers as well as the MSP I work with because only if enough people push back against these kinds of practises will Microsoft stop abusing their paying clients.

It would seem so, yes. It looks like if its a 365 license involving Exchange Online, and you don't specifically have the "desktop apps" included with that license, you can no longer add that account to the new Outlook.

So, let me get this straight.

* If I have a free @outlook.com email address I can totally add it to my Outlook for Windows app and use it in any way I need

BUT

* If I have a working email address covered by my Microsoft 365 license that I pay for, in this case, I CAN'T use Microsoft Windows Outlook to work with this email address.

Isn't it a kind of stupidity from Microsoft's side?

Check the license type. The issue seems to be related to Exchange Online 1 licenses which don't include the "desktop apps". As per the above posts, this is silly, as you could ALWAYS in the past add Exchange Online 1 accounts to Outlook provided OUTLOOK was already licensed.

Some now seem to argue "yes, but Exhange Online 1 never included the right to use it with Outlook desktop". That doesn't seem to be true. One could always do it: See here: Exchange Online Plan 1 - Possibility of configuration in Outlook - Microsoft Community and Can I use the client Outlook with a license Exchange online Plan 1 - Microsoft Community and even here Can you use a Microsoft Exchange Online Plan 1 account with Office 365 - Microsoft Community where the user asked if he/she can use Exchange Online with 365 Home (Family).

Even Microsoft ITSELF states on the Exchange Online 1 product page Exchange Online – Hosted Email for Business (microsoft.com) that Exchange Online 1 supports "Outlook integration" with "offline access". Which is CLEARLY no longer possible. They absolutely didn't have their ducks in a row with this sudden change of policy.

They're going to face a LOT of backlash from Exchange Online 1 users.

I've been using the new outlook for windows for months now as my work license does not provide me with access to outlook for desktop. I was fine for ages until the latest update and now I can't add that account. However, it appears to accept the other work account with has the exactly the same license... seriously Microsoft? What's going on? I pay for Office365 premium so one would expect I could add it as I can add it on my phone!