Part of the strace kvm that shows the problem:

open("/dev/kvm", O_RDWR)                = 3
ioctl(3, 0xae01, 0)                     = 2
write(2, "kvm kernel version too old\n", 27kvm kernel version too old
) = 27
close(3)                                = 0
write(2, "Could not initialize KVM, will d"..., 51Could not initialize KVM, 
will disable KVM support
) = 51

-- 
kvm can't initialize due to old kvm kernel version
https://launchpad.net/bugs/80293

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