"The French scored very early and got a freak try but other than that the Aussies could have won by 10 points.
"They will be a very tough challenge."
Schmidt admitted the fact the Wallabies were a work in progress under Michael Cheika made preparations for Saturday's (Sunday morning) Test tricky.
"It is hard to prepare for a team who has recently changed their coach," said Schmidt.
"We have already noticed they have changed some things and are doing different things.
"They have an abundance of talent but it will be interesting in terms of their selection as several guys have played in all their three matches so far and they have flown in Kurtley Beale.
"It is tough to back up from a match at the Stade de France and 'Cheiks' might be looking now to freshen up the team."
Schmidt, who guided Leinster to two European Cup titles and a European Challenge trophy, has turned Ireland's fortunes around since he replaced Declan Kidney after the 2013 Six Nations.
The coach said Ireland's rankings improvement was satisfying but ultimately meant little.
"You don't win anything for third place in the rankings," he said.
"We have to be realistic and look at matters on the pitch and know we have to tighten up our scrum and get the set pieces right."
Australia 32-15 triumphed in the last meeting between the nations in Dublin last year.
IRB WORLD RANKINGS (last week's position in parenthesis)
1 (1) New Zealand
2 (2) South Africa
3 (5) Ireland
4 (3) Australia
5 (4) England
6 (6) France