I recently posted a big post going into some of my feelings regarding the current situation between those 2 resorts in the thread regarding the recent Blog entry.... so I won't really get into a lot of those details again.
In General, I'd say they aren't really slugging it out, they are just continuing along with their own plans on how to grow their business and profits without any real [direct] thought about the other player across town. While they are both pursuing the obvious goal of increasing their profits, Their plans and ideas on how to reach that goal are totally different.... and you can see that in the way they are investing their capital.
As for your direct question:
In the future what do you think Disney has to do to keep its edge, and or what do they need to do to dominate the market?
How does Disney Keep it's edge? Depends on what edge you are refering too. I would say that Disney needs to STOP letting the beancounters make all the decisions regarding the park, from how to keep up and maintain the park... to how to create and introduce new and exciting entertainment options. Disney needs to start giving the people the tools to do their job, whether it's keeping the monorails running.... or the people designing a new show or ride. (And RECENTLY... Disney has showed some changes in the right direction in this regard)
What do they need to do to dominate the Market? Um..... Secretly buy up enough land that's larger than the island of Manhatten. They strike a deal with the state to give them unprecidented autonomy over that land so that they can build over the next 40years numerous theme parks, hotels, and other entertainment options.
Seriously.... Disney already dominates the Market. It's shear size pretty much guarantees that will continue to be the case for years to come. One of the biggest complaints you hear from most hardcore [and some casual] Disney fans is how Management has been resting on their laurels and letting quality and offerings decline slowly for years. The ONLY way they were able to get away with that is because they knew their domination of the market was so guaranteed because of the combination of size and the 'goodwill' the company had in the eyes of the public.
So As for how Disney will continue to Dominate the Market? It's totally up to Disney. Disney is in a position where they have more control over the future of their market domination than every other entertainment option in Florida does combined. Disney is so Entrenched in the minds of the public and their position at the WDW resort, That their domination is truly theirs to lose. No amount of Universal Harry Potter and Sea World Antartica's are going to cause Disney to lose control..... But Disney raising prices outside where people can afford to go.... or degrading the quality and value of their offered experience beyond what the public will accept.... and Suddenly Harry Potter Phase 2 and a trip to Antartica could knock Disney off the top of the mountain.