What I am confused by is what they think will happen to revenue.
Step 1: "You can now use dropbox in fewer scenarios than before"
Step 2: ???
Step 3: More customers paying more money
Dropbox is paid for and used in various places I work and personally because of the Linux support. (Their competitors ignore Linux for some reason.) In my case step 2 is going to be them losing at least $1,000 in annual revenue. And they won't have that the next year either (ie recurring revenue). Nor will they be part of future options for work or personal.
Hacker News comment - "Company is sure to lose customers over this!"
News headline - "Company reports record profits"
If Dropbox really wanted to save some money, they'd fire their accountants and just rely on armchair HN comments to tell them how well their financials are doing.
Not as old as someone publishing a blog with the title "This is the year of Desktop Linux".
Seriously. No company this large can justify supporting a fringe operating system to their investors and shareholders. In a perfect world they would open source what they did to support it so others could pick up the work and integrate it into other products. Oh well.
Of course my example is essentially irrelevant in isolation. But you do should understand that Dropbox is different than their competitors. Dropbox are the only ones who support Linux. Google Drive, Box, OneDrive etc do not support Linux (random partial featured third party clients do not count.)
In places (eg tech) where there is a Linux user base (eg the developers, devops etc) then Dropbox was the main realistic solution for the whole company. It is now just a random entry in that list, and there is no compelling reason to chose them over the others. Heck Google and Microsoft become the top choices simply because that is where the user accounts, email, calendars and then docs end up.
We don't know just how big this "Linux" group is and it certainly is small (your point). I believe the resulting effect will be larger than Dropbox expected. For example the Windows users I collaborate with do so using Dropbox because I use that for Linux. Dropbox might think they are losing me as one user, but they are also going to lose those Windows users too (they find OneDrive far more convenient as it is already there on Windows and in your Microsoft account).
I'd also argue that in aggregate Linux users are more technical and more likely to be influencers. So again that is more future revenue dropbox won't get, unless they get better than their competitors. Recurring revenue is hurt and helped much in the same way as compound interest works. As you add up the missed revenue over the years, it does get to be a big number. And that money likely went to someone else strengthening them. Remember that Dropbox grew essentially by word of mouth. They are going to lose some of that.
The open source approach would be nice, but I am skeptical. Why would a developer spend their time helping dropbox (the server side won't be open source), and not something completely open? The Linux clients done as 3rd party projects for their competitors seem to be far less complete and reliable compared to the vendor implementation.
TLDR: Dropbox did have a unique selling point in their Linux support. Without it they are indistinguishable from their competitors.
I'm going to make the argument that Dropbox doesn't support Windows, because they don't support FAT32. That's just as true as your argument that they don't support Linux, because they very much do still support Linux.
You can't install Windows on FAT32. I'm pretty sure your home directory (where the Dropbox folder is) can't be on FAT32 either. About the only thing that uses FAT32 are USB sticks smaller than 32GB. It is extremely unlikely anyone would want to run Dropbox on a FAT32 volume, and I suspect it has never worked due to the filesystem limitations. ie you would have to struggle to end up in this situation as a Windows user. And even if you did, I doubt any of their competition supports FAT32 either.
They are only partially supporting Linux already (eg no SmartSync). They are now removing support for the default configuration on many existing distros. They are removing support for setups that have worked for years, and earned them much revenue. It is their business and they can do what they want. Linux support is what distinguishes them from their competitors. And now they will lose future revenue from me and others who have posted here about it. Also note that their technical explanation is complete nonsense which is exacerbating the problem. Hopefully they will revisit the decision, or communicate in more detail what the problem actually is. I have no doubt that Linux will fix whatever it is.
I do want to clarify that FAT32 can be up to 2TB (or more if you push up the cluster size). Microsoft just decided they wanted to be pushy in their formatting tool.
Running Linux without encrypting the drive is a big security risk. Anyone who can get their hands on the machine has full read and write access to the hard drive by booting with a thumb drive. Any company that uses Dropbox for Business and has employees who use Linux will be putting a security hole in their business if they decrypt their hard drives in order to use Dropbox. (Possibly including Dropbox, if any of their employees use Linux.)
Step 1: "You can now use dropbox in fewer scenarios than before" Step 2: ??? Step 3: More customers paying more money
Dropbox is paid for and used in various places I work and personally because of the Linux support. (Their competitors ignore Linux for some reason.) In my case step 2 is going to be them losing at least $1,000 in annual revenue. And they won't have that the next year either (ie recurring revenue). Nor will they be part of future options for work or personal.