By Murat Kilicoglu, Principal, Cota Capital

Automation is integral to the modern warehouse, with robots now as common as forklifts and pallets. Yet, we stand at an inflection point where the hardware itself is no longer the primary driver of innovation.

The past decade has brought a dramatic democratization of robotic hardware. Industrial actuators that once cost thousands of dollars now sell for a fraction of that, while advanced sensor arrays and control systems have seen similar price plunges.

With component-level hardware advances slowing down, the next wave of innovation in industrial robotics will happen in software. Indeed, advances in machine vision and AI algorithms are now outpacing hardware improvements, enabling robots to make more informed decisions and execute tasks with greater efficiency and accuracy.

Another key innovation catalyst is today’s unprecedented access to diverse training datasets, including advanced sensor data as well as information from real-time enterprise systems. This makes it possible to develop robotic systems that can learn and adapt with remarkable precision. The integration of digital twins—virtual replicas of physical systems—further enhances this capability by providing simulated environments for rigorous training and performance optimization.

The next frontier in robotics is algorithms, not components

The robotics hardware market has clearly become commoditized, with today’s providers increasingly offering similar capabilities. Autonomous mobile robots (AMRs) from different manufacturers navigate warehouse floors with comparable precision, while robotic arms perform picking operations with near-identical success rates and speeds.

This hardware parity has led to a crowded marketplace where dozens of vendors compete for the same contracts, often with minimal technical differentiation. The result is a highly concentrated market characterized by razor-thin margins. Major players now find themselves in an arms race in which traditional hardware advantages provide diminishing returns.

This raises an existential question for robotics companies: where will meaningful differentiation come from? The answer is not incremental improvements to motor efficiency or gripper design. Rather, the answer is software innovation and integration. The next frontier in robotics is in code, not components.

Software is the key to better robots

While robots excel at repetitive tasks in controlled settings, they still struggle with the unpredictable nature of real-world warehouse operations. This limitation is particularly glaring given that picking, moving, and object-manipulation activities—the very tasks that prove most challenging for robots—account for most of the warehouse operating costs.

Robots must also contend with blocked aisles, damaged or obscured labels, intermittent WiFi connectivity, and endless variations in packaging deformation. Recent breakthroughs in computer vision and AI have begun to chip away at these challenges, with deep-learning models demonstrating impressive improvements in object recognition and path planning.

Yet a more fundamental challenge remains: the complex integration of diverse robotic systems. Currently, there is no universal software solution that manages all robots. Instead, there are different solutions for the different robots (robotic arms, AMRs, drones, autonomous forklifts, etc.), each with its specific use case.

The critical challenge is orchestrating various specialized robots to work efficiently together. This requires sophisticated software to prevent collisions between robots, ensure safe human-robot interaction, and maintain smooth operations in an unpredictable warehouse environment.

The stakes are high: Gartner projects that by 2026, half of all companies operating robotic systems will require multiagent orchestration platforms to remain competitive.

Unlocking investment opportunities in warehouse robotics

As investors in robotics technology, we are increasingly focused on software innovations, and we recognize distinct opportunities across the tech stack—both on-robot and off-robot.

Each layer of the on-robot software stack contributes uniquely to the robot’s capabilities. At the foundation is the robotic operating system layer (“ROS”), which standardizes communication and integrates hardware with high-level software. The latest open-source ROS (“ROS 2”) represents a fundamental leap forward by incorporating real-time performance, security, advanced coordination, and reliability – essential features for industrial robots operating in warehouses, factories, and other commercial settings. Instead of solving basic infrastructure problems, companies can now focus their energy on accelerating the commercialization of their robotics solutions.

Building on this, the perception and localization layer is transforming as advancements in computer vision and AI/ML models enable robots to better understand and navigate their surroundings. This includes technologies for object recognition and classification alongside navigation solutions like Simultaneous Localization and Mapping (“SLAM”), which leverage inputs from cameras, LiDAR, and GPS to achieve precise positioning and environmental mapping.

Further up the stack, the decision-making and autonomy layer drives intelligent behavior and adaptive task planning. AI/ML models underpin this layer, supporting capabilities such as advanced path-planning and obstacle-avoidance systems that empower robots to operate safely and efficiently in dynamic environments.

At the top of the stack, the robotics control layer benefits from AI-driven advancements that refine a robot’s movements and enhance its physical interactions, pushing the boundaries of what autonomous systems can achieve.

Off-robot areas also present significant opportunities, with the orchestration layer standing out as the most promising. As warehouses adopt a variety of robotics systems from different vendors, the demand for advanced software platforms capable of seamlessly coordinating these diverse technologies continues to grow.

This challenge will become even more pressing as the growing adoption of diverse robotics solutions further complicates integration and coordination across systems. Without advanced multiagent orchestration platforms, companies risk operational bottlenecks, inefficiencies, and falling behind competitors who can seamlessly manage these complex environments.

This integration challenge is a significant market opportunity because most established robotics companies have focused on perfecting specific use cases, whether it be AMRs for transportation, specialized picking robots, or automated depalletizing systems. While these solutions excel at their designated tasks, they often operate in silos.

Orchestration platforms that act as a universal control tower managing multiple robotics systems, coordinating their actions, and optimizing overall workflow efficiency present a strategic opportunity for emerging robotics companies. By developing software platforms capable of integrating various robots, managing traffic flow, preventing conflicts, and optimizing resource allocation, these companies can address a critical industry challenge. Ultimately, the opportunity for robotics software isn’t just about improving individual robots’ performance within a warehouse; it’s about fostering seamless collaboration, unlocking new levels of efficiency, and reshaping how robots work together.