I think this kind of lesson is actually a benefit of having a sibling--for both your kids. Right now, your DS is learning an unpleasant lesson, but I think you will be able to help him get something positive out of it.
A person's identity should not be based on how smart (or not smart) they are compared to others. Help your DS understand his identity in terms of his own interests and accomplishments.
Self-esteem comes from making an effort and meeting a challenge.
Maybe you can direct both your children to challenges other than competing with each other (or anyone else for that matter.)
That could be easier said than done if they have competitive personalities.
