Premiership - Redknapp resigned to losing Kanu
The striker is now a free agent but will not budge from his demand for a two year contract, but Redknapp is only willing to offer a one year rolling deal because the Nigerian has now turned 30 years old.
Kanu has been linked with moves to Werder Bremen and his old club Ajax, in his search for the security of a longer contract.
Portsmouth and Kanu have been locked in this impasse since January, with the player only joining the Hampshire club a few days before the start of last season.
The major sticking point is the figure of 20 games which is required for the contract to be renewed, but Redknapp insists that this is not set in stone.
Redknapp said: "I think Kanu might move somewhere else.
"It wouldn't be the biggest surprise in the world to me if he did. He's a strong character.
"He's been offered a year and will get another year if he plays 20 games in all competitions. That's the way it works. It's fair.
"The 20-game figure is a safeguard in case the fitness of a player suddenly goes.
"If a player has been injured, for instance, and hasn't played 20 games, but he's done well and is in good shape, then I could look to keep him.
"It's not as if I'm going to bomb someone out if they've done well but haven't played exactly 20 games."
Kanu was Portsmouth's top scorer last season, with 10 goals in 29 appearances.
Manager Harry Redknapp is already in the hunt for new strikers, including ex-player Ayegbeni Yakubu, currently at Middlesbrough.