The AKM was basically scaled down to fire the 5.45x39mm cartridge. New bolt, barrel and magazine were the primary changes. Many AKM components were compatible. Obviously the rear sight was changed to accommodate the flatter shooting projectile. The muzzle brake was added which made the AK74 perhaps the lightest recoiling military rifle in service anywhere in the world. It was easy for a conscript soldier to transfer from the AKM to the AK74. The entire manual of arms remained the same. The AK74 increased accuracy significantly as well as full auto controlability.
The AK74 would go on to be modernized from 1974 to 2017. Beginning rifles would have a lighter rear stock, as well as the most popular version, would be the AKS-74. This rifle sported a side folding skeleton stock. It was also the introduction of the plum colored polymer furniture and a fixed polymer stock. The AK74M would be introduced with several updates including a side folding polymer stock, smooth dust cover, solid piston, as well as, a new method of retaining the front sight base and gas block. It would use a punch to move metal instead of drilling and pinning.
The Soviets were looking for an updated rifle; one with greater range, controlability and easier to shoot. The caliber would remain the 5.45x39mm and utilize the AK74 magazine. Kalashnikov's design bureau did submit a rifle, as well as another designer named Gennadiy Nikonov.
The purpose of this design was to fire off two cartridges and the shooter to feel only one impulse, which was: putting both rounds on target. The upper receiver sat in a lower chassis where the recoil operation operated separately from the gas operation. As the rifle fired its first round, both the barrel and bolt were actuated. After the first round is completely cycled through the mechanism the barrel is at its halfway point in its rearward movement. Then the second round is fired and cycle is completed by the time the rifle barrel is in full rearward motion. The rate of fire is an extremely high 1800 rounds a minute for the first two rounds. When firing automatic, the first two shots are at 1800 rounds a minute, and after that, 600 rounds a minute until the trigger is released. After the first two rounds, the recoil of the barrel slows to one round per complete recoil of the barrel, giving it the slower rate of fire.
Regardless the rifle was officially adopted in 1994 by the Soviet Army. However it would see little service for two main reasons. With the fall of the Soviet Union the money went away. Russia could not afford it. Also it was very complex. The rifle was used by SPETZNAZ on a limited basis and I am not aware of any foreign sales. It was only in production from 1994 to 2006. You do see them occasionally at defense trade shows in the Izhmash booth. The AK74M went in production in 1991 and remains in production as of now.