Microsoft Corp notched its best ever month for the Xbox in December, selling 1.9 million of the game consoles, helped by its new Kinect hands-free system and the latest in the blockbuster 'Fable' and 'Halo' game series.

But the world's largest software company, which launched its latest Xbox 360 console in 2005, lost out to Nintendo Co' Ltd's Wii in the key holiday shopping month, according to figures from retail research firm NPD Group. Sony Corp's PlayStation was third.

Microsoft said high demand for the Xbox and Kinect add-on unit caused shortages in stores over the holiday period and forced it to accelerate delivery of units to stores that were meant to be sold in January and February.

As a result, the company expects shortages of both the Xbox console and the Kinect add-on for the next two months.

Microsoft said last week it has sold more than 8 million Kinect units over November and December, the first two months on the market, beating its target of 5 million.