"There were small differences, maybe, in individual skills," said Ireland boss O'Sullivan, part of the coaching team assembled by Lions supremo Sir Clive Woodward.
"We weren't as efficient as New Zealand, and they took their opportunities very well."
Woodward, meanwhile, was guarded about his sporting future after overseeing a disappointing Lions tour.
Woodward is now expected to take up a senior managerial role with Southampton football club, leaving rugby union following eight years' international coaching that included masterminding England's 2003 World Cup triumph.
"I have enjoyed every minute of it - it has been a great eight years of my life," he said. "But what I do in the future has nothing to do with this Test match.
"We can analyse this tour until we are blue in the face, but we lost. You can win down here with a Lions tour, there is no doubt about that, but you need everyone fully fit and fully fresh. It is not a case of bad dreams or nightmares.
"It is very important that the Lions ethos continues. We came here to win the Test series, and we didn't achieve that.
"But I don't think there is a gulf (between north and south). The only time you can really judge teams like New Zealand is, in my opinion, at World Cups when everyone arrives with the same preparation."
Lions tour manager Bill Beaumont and All Blacks coach Graham Henry gave their backing to future Lions tours, with the next overseas mission planned for South Africa in 2009.
"I wanted to make sure the Lions was a brand players wanted to play for. I think we've achieved this, and the players say they have had a great rugby experience," said Beaumont.
And Henry added: "I think the Lions brand is something special. Every time they tour is something special.
"The Lions must survive, most definitely. Every time they tour is a major occasion, and I think it is essential the Lions continue.
"It is a special team. Players in Great Britain and Ireland see it as the peak of their rugby careers, and it would be very disappointing if that was taken away in the future. I think it is essential the Lions continue."