FULL PRODUCT VERSION :
$ java -version
java version "1.8.0_111"
Java(TM) SE Runtime Environment (build 1.8.0_111-b14)
Java HotSpot(TM) 64-Bit Server VM (build 25.111-b14, mixed mode)
$

ADDITIONAL OS VERSION INFORMATION :
$ uname -a
Linux marc-ThinkPad-T530 3.13.0-106-generic #153-Ubuntu SMP Tue Dec 6 15:44:32 UTC 2016 x86_64 x86_64 x86_64 GNU/Linux
$

A DESCRIPTION OF THE PROBLEM :
Simple, legal, java program does not compile. See source code for details.


REGRESSION. Last worked in version 7u76

ADDITIONAL REGRESSION INFORMATION:
$ java -version
java -version
java version "1.7.0_21"
Java(TM) SE Runtime Environment (build 1.7.0_21-b11)
Java HotSpot(TM) 64-Bit Server VM (build 23.21-b01, mixed mode)
$ javac Test.java
javac Test.java
Note: Test.java uses unchecked or unsafe operations.
Note: Recompile with -Xlint:unchecked for details.
$

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
$ javac Test.java
Test.java:11: error: incompatible types: Object cannot be converted to String
String s = f(rawInterable).iterator().next();
^
Note: Test.java uses unchecked or unsafe operations.
Note: Recompile with -Xlint:unchecked for details.
1 error
$

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
Expected successful compilation as shown in Additional Regression Information.
ACTUAL -
Provided with Steps to Reproduce.

ERROR MESSAGES/STACK TRACES THAT OCCUR :
Provided with Steps to Reproduce.

REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import java.util.Iterator;

public class Test {

void method1() {
Iterable rawInterable = null;

// This statement fails to compile with Java 8 but succeeds with Java 7.
// The error message in Java 8 is
// incompatible types: Object cannot be converted to String
String s = f(rawInterable).iterator().next();

// These two statements do the same as above but through a temporary variable.
// This compiles with Java 7 and 8 with just the usual unchecked conversion warnings.
Iterator<String> u = f(rawInterable).iterator();
String v = u.next();
}

Iterable<String> f(Iterable<Integer> params) {
// It doesn't matter what we return, we're just verifying type-checking.
return null;
}

}

---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
Provided with Source code.