Google is preparing the next Android update, and the 1.6 version of the software will include a retooled Android Market which places a stronger emphasis on paid applications.

The Android Market has been relatively successful at attracting developers, and the over-the-air store now has more than 8,000 programs. But some developers have expressed concern about the difficulties of generating significant revenues from Google's mobile store, particularly compared to the App Store for the iPhone and iPod Touch. Developers also said it was too difficult for users to navigate the store to find paid apps.

Google is looking to address these concerns with the revamped Android Market, and it will allow developers to include screenshots, promotional icons, and descriptions to show off their apps. The store will also have tabs to facilitate finding the top paid apps, top free apps, and the most-recent programs in the store. Google is also launching four new sub-categories: sports, health, themes, and comics.

While the retooled Android Market addresses some developer problems, method of payment still remains an issue. The market uses Google Checkout for paid programs, but this payment service does not have wide scale adoption rates. By comparison, App Store users are tied into iTunes accounts, and Research In Motion's App World uses PayPal.

A recent AdMob report estimated that the revenues for paid apps in the Android Market would be about $5 million for August, while the App Store would garner about $200 million for the same period. Google's mobile store has the potential for explosive growth though because multiple Android handsets are expected to hit the market before the end of the year.

The company did not say when the 1.6 update will be launched, but it likely will not be out by the end of the year.

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