Does Apple's immediate future rest with the iPhone 7?

Ask Siri if iPhone 7 will be the answer to Apple Inc's problems, and you're told that a visit to Apple's website should answer that question 'and more'. If only it was that easy.

Apple's shares were down 7.7 percent at USD 96.30 in early trading and were set for their biggest one-day fall in more than two years, a day after the company reported its first-ever fall in smartphone sales, arousing talk of 'peak iPhone'. For many analysts, the company's immediate future rests with iPhone 7, which Apple is expected to launch in September.

"If iPhone 7 doesn't surprise with meaningful new useful features, we worry that consumers won't upgrade," Macquarie analyst Ben Schachter wrote in a note to clients.

"And unfortunately, nothing that we've seen about iPhone 7 thus far strikes us as particularly innovative," said Schachter, who cut his price target to USD 112 from USD117 while maintaining his 'outperform' rating on the stock.

The iPhone 7 is expected to sport a new look with features such as waterproofing, wireless headphones and force touch as the home button.

But many wonder if that will be enough to entice users to dump their existing iPhones or switch from the Android-based phones that have come to dominate the smartphone market.

Goldman Sachs removed Apple from its conviction list after Apple's results and said it expected the company's shares to remain weak until the market gets more comfortable with the prospects for iPhone 7.