It may well be that there is no alternative. Maybe Dropbox did try everything, maybe tried to let those 500 people work on producing different products or on finding other sources of income, I don't know. And I get that it's important for a business to keep itself afloat. But it's a recurring phenomenon in larger tech companies that I find puzzling.
Many of the answers in this thread have been perfectly reasonable. And I'm probably kidding myself when I think that "if I were that CEO, I'd do things differently".
I think I prefer the severance, the full disclosure, the opportunity to find another job and the possibility to keep teams together at a new thing.