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Customer asks: Any Pros and/or Cons between SmartCloud & Office365?

A loaded question putting us between two behemoths.  But let me try and break it down: 
Lotus Notes WAS the better product, but M$ has consistently been able to spin their product and the market such that there is more adoption and third-party add-ins available for Exchange/Outlook.  This corpus should not be overlook, as they will keep demand high on the development and refinement of the Exchange. On the downside, one area that has also sprung up and keeps pace - nip & tuck - is the anti-virus aspect.  As we all know, no one is writing virus for LN; does this have to do with the built-in security or that it is simply not a juicy enough target. 
Welcome to the Cloud: 
OK – everyone will claim they got to the cloud first.  Google with gmail is obvious; however, M$ will also claim that all their x-box fans and Hotmail accounts prove they have been in the cloud a long time.  IBM will run around  and say before any of us were born Watson himself invent the cloud but called it time share and it came with function keys.  The real contest, in my opinion is associated with market share, because that population will demand and expect the services they are used to. They will also cry bloody murder if the system goes down.  Therefore, it comes down to  Google and M$.  IBM has waffled away with LN far too long and have abandoned key functionality that M$ can now deliver.  Remember that LotusSuite thing?  Isn’t that the E3 package?  DomDoc – isn’t that SharePoint?  And IBM still has an awkward way of getting to mobile devices – which are really key to cloud computing and that whole idea of anytime/anyplace/anywhere.  If LN has a life, it is not in the cloud. 
Don’t believe for a second that your LN users’ experiences are going to be EXACTLY like what they will get in the cloud.  There will still have to be training, albeit not as much as with Exchange.  But quite frankly, once they have started to use Exchange and see the many points of integration with Office as well as other apps, their productivity will increase.  Also you say that IBM is offering you an attractive deal. They would have to be paying you to take it as well as doing the migration for FREE.  We have attained for 501c3 as well as qualifying 501c6 organizations FREE E1 licenses as well as heavily discounted E3 license (meaning that you get 5 copies of Office included).  This is not something that IBM can offer.  There is a cost to the M$ offering, but if your cards are played correctly, that cost will be just the migration effort. 
There you have my two cents.  Also, really consider that no organization is moving towards IBM, either on the ground, up in the air, or in the clouds.