It's a bit more than "2 extra rounds." The 365 is about the size of a Kahr PM9, which is truly tiny, significantly smaller than a Shield. I haven't handled a 365, but I hear the trigger is similar to a Kahr, as in longer and smoother than the M&P's short "click." It's a very different gun than the Shield overall.

If S&W wants to compete with the 365 they'll have to develop a whole different platform. Time will tell - if Shield sales start to plummet then it's time for S&W to make a decision.