As has been reported elsewhere, take the front page of Red Hat's website for example, Red Hat has "acquired" Qumranet Inc for a little over $100 million. In a presentation a month or two back for the BillingsLUG meeting... I played some demo videos of Qumranet's Solid ICE product and discussed KVM. Just in case you weren't aware, Qumranet is the company that sponsors the development of the Kernel Based Virtual Machine which got merged into the mainline Linux kernel starting with version 2.6.20. KVM requires hardware support for virtualization to be present in the CPU (Intel VT / AMD-V).

Doesn't Red Hat already use Xen in RHEL?

Yes, Red Hat does use Xen in RHEL although they prefer the term, Red Hat Virtualization. Fedora added support for KVM some time ago... and Red Hat has been working hard to help KVM get to the point where it is mature enough to become a replacement for Xen. They have also been funding a number FOSS virtualization related projects (see oVirt for example) several which support KVM.

Why do many consider KVM a better approach than Xen?

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