The latest "eagerly awaited" launch of an Apple product in San Francisco tonight saw the smart money placed on the iPhone - not least because the iconic American computer company's partner in the venture, Motorola, as good as announced as much on its own website earlier in the day.

Apple is renowned for trying to keep security around its product launches very tight, but speculation on specialist blogs and websites today strongly suggested that the iPhone - a combination of a Motorola ROKR mobile phone with the data storage capabilities of the budget-priced iPod music player (pictured) - would be in the spotlight. Analysis of trade orders for components had provided some of the most influential clues for Apple-watchers.

Other possible candidates for the launch included the video iPod, or a high-capacity iPod that stores songs in memory chips rather than a hard drive.

Information on the iPhone suggest that as many as 250,000 may already have been made ready for release in Britain next week. The phones would cost between £200 and £250 without contracts, or be free to O2 contract customers. The iPhone's storage capacity would allow for 0.5GB, or around 100 tracks, loaded on to the device either via a PC/Mac, or via an iPod interface.

Apple's own press release was typically opaque: "1,000 songs in your pocket changed everything. Here we go again", it said.

Or not. Analysts were more circumspect in their predictions of success for the phone, the latest in the Apple iPod line which has transformed the digital music market and the fortunes of the otherwise moribund computer maker.

"Mobile users want to hear music on their mobiles as shown by the success of full-track music download services launched by mobile operators," Jerome Buvat, a consultant at Capgemini Telecom, Media & Entertainment, said.

"In Japan, KDDI reported 5 million full-track music downloads in five months after the launch of the service; Vodafone reported 1 million full-track music downloads in four months following a promotion offer of three free music downloads per month.

"Second, launching this phone will enable Apple to target a much larger market - by the end of the year, there should be around 40-50 million music-enabled mobile phones in western Europe, while Apple has sold around 20 million iPods since its launch.

"By launching this phone, Apple expects to increase its download music revenues as users of the phone can only buy songs from iTunes."

But implicit in this analysis is that the iPhone, unlike the iPod, while undoubtedly benefiting from the "tech cool" styling associated with Apple products, will not be the first in the market. Music phones have been available in the United States since 2000, and the iPhone's biggest rival is almost certain to be the Walkman phone, from Sony, the Japanese company which inovated the original cassette-driven personal stereo in the 1970s.

Other mobile users have already established footholds in the market, and music labels, such as HMV and Virgin, are also entering the download market. Services such as Napster and broadband operators are also competing for a share of the digital music market.

And there is another important factor, as the slow uptake of 3G phones has demonstrated. "The choice of the handset is still the most important factor for consumers when choosing a mobile operator," Mr Buvat said.

People can be very choosy about their mobile phone: will those who have already opted for Wap functions or high-definition camera and video phones still be prepared to switch to another handset that provides only music?

"People are not really flocking to phones with new features," says David Chamberlain, an analyst with In-Stat. "They just want to talk on the phone."

But the potential market is huge. There are about 2 billion mobile phone users worldwide, so even a modest hit in a market that big can be a huge financial success.

Take Motorola's trendy, multimedia RAZR phone. It helped propel Motorola cell phone revenue up about $1 billion in its most recent quarter compared with a year earlier. The iPhone could duplicate that success.

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