No contradiction - the real story is they let KVM in at all
I agree with AC above: there is no contradiction.
I'm a Linode customer, and it was a royal pain rebooting servers every couple of months because yet another security hole was found in Xen. Linode abandoned Xen and the world is a better place: https://www.cio.com/article/2937714/cloud-computing/why-linode-moved-to-kvm.html .
My take on this story... AWS have come to the same conclusion: Xen is a dud. As general policy, they will create new images based on KVM. For now, they will not disrupt the stack of existing images, and minor variations could still use Xen. I suspect the P3 is an example of the latter.
"We asked AWS if the introduction of KVM had to do with any issues with Xen; an AWS spokesperson responded with a statement that the P3 instances on sale since October use Xen, and the company will continue to heavily invest in Xen."
Note the spokesperson did not directly answer the question. "Heavily" means whatever I want it to mean.
We must speculate because Amazon will not give us a definitive answer. They have no need to broadcast in detail what they're doing. Most customers don't care. Over-detailed descriptions give competitors a shortcut - instead of doing their own research and testing, they can just copy AWS. A bit like the Scottish fast food chain doing intensive research on the ideal site for a store, and the competition simply opening up next door.
AWS will be supporting and indeed fixing Xen for the foreseeable future, so it would be stupid to disengage from the Xen project. Jeff Bezos and the gang are not stupid. Weaning themselves off Xen will take years, and will happen by natural attrition anyway as they introduce new, more capable and more cost-effective images. No need to make a song and dance about it.
A year from now, Xen might be improved and AWS might revisit this decision. I doubt they will change their minds. No, the really significant thing is *letting KVM into the stack at all*. That's the real story, and Simon Sharwood is spot-on to notice. A non-answer from a PR person in Amazon does not contradict his story.
And can I say one of the reasons I read and like The Register is their bulldust detectors are pretty good. I think being based in the UK and not the US helps. There is a level of scepticism, even cynicism, when other IT publications (*cough* TechTarget *cough*) are too ready to copy-paste PR guff.