Smackdown is simply a grander version of old back up shows like "WWE Superstars" and "Tuesday Night Titans" (which I'm old enough to just barely remember). Of course, those shows had no original match content, only recaps from RAW and a few clips from house shows, while Smackdown has original content, which is what makes it a grander version.
But Smackdown was never intended to beat or be the equal of Raw. Originally, it was just a way of giving us even more exposure to the biggest stars in the company at that time: The Rock, Stone Cold and Triple H. The Rock even called it "my show." Interestingly, with the end of the brand extension, the show has largely gone back to the star format, giving the lesser performers less exposure. If the company has Smackdown performers they want to push, they're moved to Raw: ex: 3MB. Slater, McIntyre and Jinder were all Smackdown wrestlers, but when they're given a feature segment, we see it on Raw.
No, Raw isn't killing Smackdown. The secondary show is what it's supposed to be. Some weeks, the writing for Smackdown is pretty good and the production runs slickly; at those times, it seems the show can thrive on it's own. On other weeks, the writing is uneven and I don't even care if Smackdown is on or not. After all, if we want to see Smackdown headliners like Orton and Del Rio, we can see 'em on Raw (which is probably the big reason this topic is asking whether the #1 show is killing #2).
Honestly, I never understood why the powers-that-be thought Smackdown would serve them better on Friday night after having originated the show on Thursday. Friday isn't a good TV night; it's the weekend. Of course, now that TNA operates on Thursday, the argument might be moot. But I liked Smackdown on Thursday night much better than Friday. It'd be interesting to see what would happen to TNA if Smackdown was moved. Probably we'd wind up with "TNA Impact on Wednesday Night."