Public sector organizations increasingly engage in robotic innovation projects to assist or substitute for humans in service delivery. However, transitioning small-scale development projects into a large-scale context is a notoriously difficult task that often fails, with many promising robotic projects becoming lost in the diffusion “chasm.” We investigate a failed robotic diffusion project to analyze what went wrong and what can be learned from it. Despite an increased interest in learning from public sector digitalization failure, little attention has been paid to how and why seemingly successful service robot initiatives fail to move beyond the pilot stage. We identify three types of explanations for diffusion failure using an in-depth case study of a service robot initiative in the Danish eldercare sector that had a high degree of management support and commitment from key stakeholders. Our analysis demonstrates how the failure was caused by interrelated and context-specific reasons regarding the lack of technological maturity of the service robot (technology-oriented explanations), inadequate problem-solution fit in the conceptual design (scope-oriented explanations), and misalignment between the robot company and public sector organization mindsets (competing logic-oriented explanations). We outline the lessons learned for public sector digitalization and discuss the paradox between the hype surrounding robot innovations and their slow diffusion.