Google Inc.'s (GOOG) Android mobile operating system has generated buzz, but the Internet search giant still faces challenges to convert that excitement into a significant revenue stream.

Mountain View, Calif.-based Google first announced Android - free to phone makers and third-party developers - almost two years ago in a bid to stake its claim in the mobile search advertising market.

Android has gotten attention in recent weeks as many cell phone makers and wireless carriers have announced plans to launch handsets built around the open-source software platform. With these launches, Android now powers nine devices with 32 carriers in 26 countries, giving Google a fighting chance in a market dominated by the Symbian system, used by Nokia Corp. (NOK); Apple Inc.'s (AAPL) iPhone and Research in Motion Ltd.'s (RIMM) Blackberry.

But Google must still overcome several key hurdles to grab a chunk of the mobile market. For starters, Android's success depends on many partners, who may not always be in lock-step. Also, third-party application developers, who build apps with which users customize their phones, remain mostly focused on the iPhone. And mobile advertising is still a promising revenue stream no company has yet figured out.

"The benefits Google promoted to handset makers appear to be realized," Forrester Research analyst Charles Golvin said. "The value of Android to Google, especially from a revenue aspect, is yet to be proven."

The search giant has cobbled together many partners, including handset makers Motorola Inc. (MOT), HTC Corp. (2498.TW), Samsung Electronics Co. (005930.SE) and LG Electronics Inc. (066570.SE) as well as top carriers in the U.S and Europe.

But the downside to Google's strategy is that the company is dependent on those partners to develop phones, usage plans and marketing campaigns that are slick and affordable enough to sway consumers.

"If this thing is going to overtake Apple, where's Google's message?" Gartner analyst Ken Dulaney asked.

Google declined to comment.

One key advantage for Apple is its successful App Store, where users can download from among 85,000 apps. Google's app store, in contrast, has only about 10,000 programs.

Mobile apps are critical for two reasons. Yankee Group estimates the U.S. mobile app market will reach $4.2 billion in 2013; meanwhile, consumers are likely to be drawn to the mobile phone platform that boasts the greatest number of apps. However, it becomes a chicken-or-egg debate because developers will turn their attention to Android as more people buy those phones, but consumers might be reluctant to buy Android phones without a robust set of apps.

"I havent seen a killer app for Android," Brigantine Advisors analyst Colin Gillis said.

A third challenge for Google will be to make sense of the nascent mobile ad market. The company believes it can expand its online advertising business by getting more consumers to use mobile phones to tap into the Internet. Analysts also believe small advertisers - like a local pizzeria - will pay more to buy ads targeted at nearby mobile subscribers.

One analyst sees Google's gross mobile search revenue exceeding $500 million by 2011, although it's unclear how it will share revenue with carrier partners.

Others aren't as optimistic, noting the PC-based model for ads cannot easily be replicated on phones because of the smaller screens. Also, it isn't clear how receptive consumers will be to location-based ads, a model that works only if users are willing reveal their location.

"The advertising models haven't been figured out yet," Gartner's Dulaney said, adding it will take several years to do so. "Will Google be the one to figure it out? They could miss it terribly."

-By Scott Morrison; Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com