Apple could soon offer a new iPhone with twice the memory but for the same price as the original device in a move likely to disappoint existing owners, according to analysts.

An increase in capacity from 8GB to 16GB or even 32GB is expected soon, with industry analysts saying that plans could be announced as early as today’s Macworld conference and expo, an annual trade show dedicated to Apple in San Francisco.

Speculation about the next stage in the iPhone’s development came as talks between Apple and China Mobile to launch the device in China were halted yesterday.

In the United States, a 3G iPhone is also understood to be in production, but it is not known when Steve Jobs, Apple’s chief executive, will unveil details of its launch.

Ben Wood, an analyst for CCS Insight. said that Apple could speak today about making video content more readily available on the iPhone and iPod Touch. This may include being able to access video on the move through wi-fi. “Apple could become the market-maker for video on mobile devices. Phone manufacturers have been seeking to kick-start this category for some time with only limited success,” he said. Mr Jobs is also expected to announce plans to enter the film-rental business, which will operate through its online iTunes Store.

“While we are not sure about timing, as this is largely dependent on deals with the movie studios, we believe that the company may use Macworld as an opportunity to introduce such a service,” Scott Craig, a Banc of America Securities analyst, said in a note. He also forecast the introduction of refreshed iPhone and iPod Touch models and expects Apple to introduce a “skinny Macbook”, weighing only a few pounds, which is already being named on blogs as “Mac-book Air”, and a refreshed Apple TV.

It will be difficult for Apple to top last year’s announcement, when it used the event to introduce the iPhone and the Apple TV set-top box.

Mr Jobs’s big speech comes after the unexpected termination of talks with China Mobile. It is understood that China Mobile was unwilling to agree to the standard revenue-sharing arrangement that Apple has struck with telecoms operators in other countries. Apple is believed to have asked for a 20-to30 per cent share of China Mobile’s user fees from iPhone customers.

Duncan Clark, chairman of BDA China, a Beijing-based telecoms research consultancy, said: “It’s not a surprise. China Mobile doesn’t want to share its nonvoice revenue. The two have very strong egos and, as in any relationship, that often doesn’t work.”

China Mobile has 350 million subscribers, a higher figure than the population of the United States. The iPhone, which allows internet access and plays music, sells for about $500 in the United States – about double the average monthly salary in China – but it could still be a hot-ticket item in a country where young, increasingly well-off urban residents like to change their mobile phones regularly to keep up with the latest technology.

The breakdown of talks with China Mobile does not necessarily mean the end of all chances for the iPhone to be sold in China. China Unicom Ltd, another telecoms company, may be interested in stepping into the breach to offer the iPhone exclusively in the People’s Republic.

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