REDMOND, Washington (Reuters) - Nintendo Co Ltd , already struggling with shortages of its Wii video game console, is also seeing signs of higher-than-expected demand for its DS handheld device, a top executive said on Monday.

"The DS continues to perform exceptionally well, with some retailers voicing concerns about DS inventory going into the holiday," Reggie Fils-Aime, president of Nintendo of America, told Reuters in an interview.

The DS has been the best-selling piece of gaming hardware this year, moving 1.5 million units in November, according to market research firm NPD.

Nintendo, which is striving to meet Wii demand more than a year after the machine first went on sale, had also advised retailers that it did not approve of the practice of bundling the consoles with extra games and accessories and selling the package at a higher price.

A Wii by itself sells for $250 -- cheaper than Microsoft Corp's Xbox 360 and Sony Corp's PlayStation 3 -- but some retailers have offered bundles priced for double that price.

"Retailers have already been given feedback that we are not big fans of that. We think it masks some of the price advantage we have versus our competition and, frankly, the consumer should decide what they want," Fils-Aime said.

Asked if Nintendo had threatened such retailers with fewer Wii shipments, Fils-Aime said only that the company carried a lot of weight as maker of one of the most highly sought items this holiday.

"We don't have to remind retailers of the strength we have right now. We are simply making an observation and that reinforces our point quite nicely with retailers," Fils-Aime said.

Fils-Aime also said he had high expectations for Nintendo's recent Wii game "Super Mario Galaxy," which some analysts said saw strong but not spectacular first-month sales despite being one of the most critically acclaimed games of all time.

The game sold 1.1 million copies in the United States in November, but fell short of marks set by other blockbuster titles such as Microsoft's "Halo 3," which sold 3.3 million copies in its first month.

"'Mario Galaxy' absolutely lived up to our expectations," Fils-Aime said. "Galaxy will have extremely long life and will have extremely large numbers throughout that entire life."

"Mark my words, look in 6 months and no one will have any remembrance that it 'only' did 1 million copies in its first month."

(Reporting by Scott Hillis; editing by Carol Bishopric, Richard Chang)

© Copyright 2007 Reuters.

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I4U Nintendo DS Photo Model. See more photos.