KVM is used, a lot: it is the backbone of Red Hat's virtualization in RHEL6. Also, if you create a new VM using Gnome Boxes, you will have a KVM VM unless you go out of your way.
Running your stack on KVM is like running your IPSec concentrators on OpenBSD (been there, done that) - it makes an awful lot of sense technically, particularly to the people who are actually using it every day - but, from the perspective of the enterprise - No Support ecosystem, No market presence, Poor compatibility testing. One of the best things ever for Linux in the enterprise was RHEL/SUSE and their corporate support for the platform.
I'm willing to wager 90%+ of the virtualization market in the fortune 500s is VMware, and KVM has next to zero market penetration.
I'm hoping that changes with the broad market support we're starting to see from IBM and the various open stack alliances.