QF hasn't had to compete in domestic business-class for years. So they cut it all back, product, service, fleet. Now that they have to compete, I am sure they will. They have the cash and now.. the reason. They will up their product quick-smart.
They also have the premium frequent flyers, the government and corporate contracts, the chairmans lounge, and the aircraft.
Virgin has developed a fantastic product (although with a middle seat in JC on the 330,which Qantas announced today they are removing due to customer feedback), but they are making a hefty loss, and will face an uphill battle with swaying the corporate giants.
Qantas just has to meet the new standard. They are not in a position where they have to better it. If they meet Virgin's inflight product, they will win. They already have the corporate market, if they make it as good as Virgin's, they wont lose that market.