Sources say that Apple Inc. (Nasdaq: AAPL - message board) and Vodafone Group plc (NYSE: VOD - message board) are planning to announce a European iPhone deal within the next couple of weeks but are working to try and iron out some kinks with the device before launch.

    Vodafone--along with T-Mobile International AG in Germany -- has already been slated as one of the European mega-carriers likely to carry the iPhone. Now a source says that a deal could be announced very soon. (See iPhone Fever Hits Europe.)

    Analysts are expecting that Apple will eventually strike a number of major carrier deals in Western Europe. "We have heard Vodafone, O2, and T-Mobile," says Gartner Inc. analyst Ken Dulaney, while noting that there are still many rumors flying 'round about the device.

    "Not sure if Vodafone will cut the deal that AT&T cut," Dulaney adds. "We don't think they want to give up that much control." (See iPhone Revenues Flow in Three Streams.)

    Another industry source says that Apple is trying to fix some bugs for Vodafone and other carriers and suspects that the carrier may announce the deal before it actually starts shipping the phone.

    The source provided Unstrung with a partial list of iPhone enhancements carriers are looking for:

    YouTube Inc. : Apple only allows the YouTube application on the phone to do a one-word search. "Vodafone wants it to work much more like the Internet version."

    The Calendar sync to Microsoft Corp. (Nasdaq: MSFT - message board): Outlook and Exchange email doesn’t work in most cases. "Apple doesn’t license the Microsoft Activesync technology, so there are many problems with those trying to make Outlook and Exchange work as claimed," says the source. "Vodafone, T-Mobile, and AT&T believe many users are high-end users that will demand that the Outlook and Exchange claims of Apple actually work. Right now, known problems include the inability for the iPhone to synch calendar items reliably."