New vendors are lining up to deliver an Android phone in 2009, while Google is planning an update to the software -- and gave around 18000 of the first-generation phones to its staff as a Christmas present.

Google gave 85% of its staff (around 18,000 people according to reports) customized, unlocked versions of the HTC Dream, the first commercial Android handset, which is sold by T-Mobile as the G1.

Video: T-Mobile introduces G1, first phone to use Android

Meanwhile, handset makers are planning to improve on the HTC G1, which got mixed reviews, and Google is readying a new version of the Android operating system. In December, Sony Ericsson was one of a group of new members who joined the Open Handset Alliance, the industry group supporting Android. Other supporters include Motorola and Huawei, with Samsung, predicted to be the first tier-one handset maker to deliver an Android phone, according to Korean sources quoted at Rethink Wireless.

Google has developed an updated to Android, known as Cupcake which includes bug fixes for e-mail and the clock as well as new features such as speech recognition, virtual keyboards, and handling of attachments, and improved camera functions such as video capture. All this is a private Google development, which will be released to open source through the Open Handset Alliance, early in 2009.

These updates may get their first outing in an updated "G2" from HTC. Reports on various blogs give this phone a 5Mpixel camera, a touchscreen and Wi-Fi - with a delivery date somewhere between the end of January (early) and April (around the time Samsung is expected to deliver).