"Generally speaking, New Zealanders are pretty arrogant about their feelings about the All Blacks and think they're the best team in the world," Henry said. "That's not the case, especially since the game has gone professional."
Henry was speaking the day before he assembles the squad in Auckland before heading to South Africa on Friday for their opening Tri-nations fixture against the Springboks on 6 August.
"We also have to give credit to other rugby nations around the world. They can play the game and it's not something New Zealanders acknowledge very often," added Henry, who led his side to a 3-0 series victory over the British and Irish Lions earlier this month.
"Australia are a much stronger side now, especially over the last few years. England have improved, though they've dropped off the pace in the last 18 months. And France ... so I think it's just greater competition these days."
Henry had said in the past that New Zealand's lack of World Cup success since winning the inaugural tournament in 1987 was something he intended to rectify with a rotational selection policy, even at the expense of criticism and the occasional Test match loss.
"The expectations over the 100 years of All Blacks history is to win every Test. What we are trying to do is to develop depth as well as maintain a good record," Henry said. "We don't like to do those things but yes, if necessary," he added when asked if he would accept Test losses.
Henry also admitted that while the 2007 World Cup in France was the team's long-term priority, he was not looking beyond the Tri-nations. "That's the No 1 campaign the All Blacks will be involved in over the next three years and we have put strategies together to work towards that.
"But we have got a huge Tri-nations campaign ahead of us and we're not looking much further than that."Reuse content