The 34-year-old world number one was the clear favourite to win her seventh title at Melbourne Park, but Angelique Kerber didn't read the script, stunning the defending champion 6-4, 3-6, 6-4.

The shock halted Williams' bid to match Steffi Graf's Open-era record of 22 Grand Slam titles, which will now have to wait at least until the French Open in June.

Williams was gracious in defeat, praising Kerber generously, and she said she would learn from her mistakes -- of which there were many in an uncharacteristically error-strewn performance.

"For sure, I think it's good to know that if I want to win some tournaments, I have to play better," she said.

"I was missing a lot off the ground, coming to the net. She kept hitting some great shots actually every time I came in.

"I think I kept picking the wrong shots coming into it. But, honestly, it's something to learn from, just to try to get better."

Kerber, seeded seven, made the most of the litany of unforced errors, but she also played some quality tennis, dominating points from the baseline while landing some crucial drop shots.

Afterwards Williams seemed almost as happy as Kerber, crossing to the other side of the net to embrace the 28-year-old and offer congratulations.
Kerber called the gesture the sign of a great champion.

"She told me after that she's really happy for me and that I really deserved it," said the German. "So, yeah, you saw that she is really, really a great person. She is inspiring a lot of people."
                  
- 'After two is one' -                  
                  
Williams joked, "I should get into acting!" when told she looked almost as happy as her opponent.

She added: "No, I was actually really happy for her. She's been around a really long time. We've had a number of matches. I've beaten her a lot.

"She played so well. She had an attitude that I think a lot of people can learn from: just to always stay positive and to never give up.

"I was really inspired by that. So, honestly, she's a really good girl. If I couldn't win, I'm happy she did."
Throughout the tournament Williams has spoken about enjoying her tennis more and savouring each win, conscious that she could be in the twilight of her long career.
She reiterated that she planned to be back at Melbourne Park again next year, while noting that her loss meant Kerber would move behind her at world number two when the new rankings are released on Monday.
"I mean, she's had a great month. She got to the finals in Brisbane. She won here. So, yeah. I was surprised and really happy for her," she said.
"I'm like, whoa, number two. What's after two is one, so I guess I better be careful."